Bucky Isaacson
President, Futures Funding Consultants Inc. (NFA 1974)
Program(s) Developed: Co-Chairman CTA Expo Chicago, New York
Interview Date: December, 2010
Interviewed by John F. Gallwas - Founder of Striker Securities
Bucky Isaacson became one of the early pioneers of managed futures when he joined a group in 1969 that developed a computerized trading system. From that point forward he has focused on developing managed futures business, particularly in Asia, and becoming a prominent leader in the managed futures field. He is a former member of the Board of Directors of the National Futures Association and currently serves on the Board of directors of the National Introducing Brokers Association. He is President of Futures Funding Consultants with headquarters, located 30 miles south of San Francisco, in Woodside, California
John Gallwas: According to BarclayHedge, Commodity Trading Advisors (CTA) had $233.4B under management at the end of the 2ndQ of 2010, up 6.2% from the 1st Q and plus 13% from a year ago. In the last five years CTA assets under management have expanded 1.8 times and in since the 2nd Q of 2001a little over 6 times. As someone who has been an active participant since the beginning, what are the key reasons for this impressive growth?
Bucky Isaacson: I have a different view of the growth of assets under management then many in the managed futures community. I suspect the assets managed by CTA's as a per cent of total assets invested in the alternative arena has remained relatively constant over the years. There may be bumps in the relative size of managed futures investments but those normally occur when hedge funds under perform the benchmarks and usually migrate back to hedge funds when their performance picks up. In other words CTA's have held their position but not done a good job of growing relative to other alternative investment vehicles. I also suspect that new assets have gone mainly to large CTA's whose infrastructure closely resembles that of a hedge fund and who trade more than traditional futures. In fact the investment community considers these large CTA's hedge funds. There are several reasons for this phenomenon:
- Most CTA's concentrate on their trading strategies and pay little attention to developing a marketing strategy or developing the infrastructure necessary to look like a professional management group.
- Hedge fund managers tend to be former bank traders who have developed networks that they can get initial capital from. They have track records from their trading at the bank that may be transportable. Most emerging CTA's do not have that luxury.
- There is no industry association that focuses on CTA's and their problems. Many, in fact, feel that CTA's and pool operators are under represented on the NFA board where the total number of CTA and Pool Operator registrants far exceeds the number of FCM's.
John Gallwas: CTA EXPO was established in 2008 to help professional capital raisers and allocators identify trading talent and to promote investing in managed futures. In two years, expo has grown to be a major industry event. Participants include brokerage firms, clearing firms, exchanges, hedge funds, and industry consultants. Striker has supported the program, because we felt there was a need for this type of program for both the "buy" as well as the "sell" side of managed futures. As Co-Chairman with Frank Pusateri, at CTA Expo Chicago on 11/03/10, please tell our readers about the conferences objectives and why it was so well attended this year.
Bucky Isaacson: When we started CTA EXPO we felt that there was no venue where CTA's could meet with potential capital sources, have a conference program that focused on topics that could help them build their businesses and provide significant networking opportunities. We also wanted to make it a 1 day meeting so attendees would not have to take too much time away from their normal activities and keep the registration cost low so emerging managers could afford to attend. In Chicago at the November EXPO we had over 430 attendees and had to turn people away. Frank Pusateri and I feel that this is a good indication that we are meeting our original objectives.
John Gallwas: What should a prospective CTA consider, before trying to launch a professional management business?
Bucky Isaacson: A start up checklist should include the following:
- How much working capital do I have and how long will it sustain my business.
- How much do I have to spend for marketing and how much time can I afford to be on the road.
- How will I secure my initial trading capital?
- Should I use a contract marketer?
- Should I consider a seeder?
- Do I have a business plan with a marketing component?
- Will my operations pass a due diligence inspection?
John Gallwas: With the successful CTA Expo Chicago, and its record turnout behind you, please tell us what is scheduled for the future.
Bucky Isaacson: The 2011 CTA EXPO includes a conference in New York on April 21 and one in Chicago on September 13. We are considering doing one in London. The proposed date for that is July 7. Readers can look at the website, CTAEXPO.NET and join the CTA EXPO Linkedin network for details.
This interview is for informational purposes only and is not intended to be a solicitation of any kind. Trade only with risk capital. The risk of trading can be substantial and each investor and/or trader must consider whether trading systems are a suitable investment.
*This interview originally appeared in the Striker Report