Morgan Stanley distributed material to potential investors advertising an alternative investment known as managed futures, claiming that diversity in adding a managed future offering to one's portfolio could outperform portfolios containing stocks and bonds alone.
What Morgan Stanley did not mention is that such while managed futures funds can produce significant gains, investors may very well experience absolutely no gain, thanks to steep fees, commissions and expenses.
For instance, Morgan Stanley's Spectrum Technical LP managed-futures fund made $490.3 million over the course of 10 years, but investors ended up losing money.
For its efforts, Morgan Stanley and its fund managers charged $498.7 million in commissions, expenses and fees, or $8.3 million in net losses.
According to the SEC and Bloomberg, 89% of $11.51 billion in gains in 63 managed-futures funds during the 10-year period between 2003 and 2012 went to fees, commissions and expenses: 29 funds actually left investors with losses, even though they, as the Morgan Stanley material claimed, "outperformed" more traditional fund options.
At present, the National Futures Association does not require firms to present information related to tangible fee impact on returns. In other words, advertisements and the like need not mention that even when a fund does well, the investor may still lose money.
Because of this significant omission, many investors are left with false hope and inaccurate expectations about managed futures funds.
If you have invested in a managed futures fund and your broker, fund manager or firm failed to disclose the nature of the fund's fees and commissions or otherwise misrepresented the realistic expectations of investing in such funds and this deceit has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
News: How Investors Lose 89 Percent of Gains from Futures Funds (Bloomberg)