Fitapelli Kurta is investigating complaints on behalf of investors who have invested money in the Systematic Momentum FuturesAccess Fund. According to Merrill Lynch’s SEC filings, the 7,752 investors in the Systematic Momentum FuturesAccess Fund had losses of $135.3 million, after fees, from 2009 to 2012.
The Systematic Momentum FuturesAccess is a type of investment fund known as a “managed future fund.” Many brokers promote managed futures, such as this one, as protection against market declines. In reality, managed future funds, like Systematic Momentum FuturesAccess, are “noncorrelated,” which means that their performance does not track that of any other investments. This is often achieved by using “black box” trading algoritums, which are not even understood by the managers who are paid large fees. For example, Merrill Lynch stated in an August 2010 SEC registration for its Systematic Momentum FuturesAccess LLC, “particularly given the black box character of many managed-futures strategies, it is virtually impossible for the manager to detect strategy changes.”
Managed-futures funds are a subset of hedge funds. The funds are run by commodity-trading advisers, or CTAs. Although most hedge funds typically charge a 2 percent management fee, managed-futures funds often charge clients 7 to 9 percent of assets invested annually.
“The big news here is, the fees are so outlandish, they can actually wipe out all the profits,” says Bart Chilton, one of five members of the Commodity Futures Trading Commission (referencing managed futures funds generally).
The risks, costs and fees associated with managed futures funds, such as the Systematic Momentum FuturesAccess are difficult for most investors to understand. As a result, these are not suitable products for even the most sophisticated investors.
If you or someone you know invested in the Systematic Momentum FuturesAccess, please contact us today for a free consultation and evaluation of your complaint.