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CTA Challenge participants in final stretch of 2015 competition

Thursday, August 20, 2015
Opalesque Industry Update - The CTA Challenge, a year-long competition for commodity trading advisors (CTA) organized by Dallas-based Coquest Inc., is hitting the home stretch of 2015, and at this point the winner is too close to call. Several different trading programs, judged by a combination of risk adjusted return and volatility, have held the pole position, jumping as much as five levels in a month.

“Everything is up in the air at this point,” said Steve Petillo, Coquest Vice President, who manages the competition.

Three years ago the CTA Challenge was launched by Altegris Clearing Solutions, but as of 2015 it is organized and hosted by Coquest Inc., one of the largest independent brokers in the U.S. derivatives markets. This year there are 27 participants, including last year’s winner Auspice Capital Advisors and the 2013 winner Mehnert Capital Management.

“Historically, the CTA Challenge has always been a way for us to market CTA talent that we work with and a way for us to track emerging managers against their peers,” Mr. Petillo said. “It’s also a way for us to help the CTA community, but at the same time because we’re asset allocators, it’s an easy way for us to track the talent as well as introduce CTA participants to other investors.”

Maxwell Eagye, Coquest Managing Director, noted, “With the addition of Coquest Advisors this year to the Coquest group of companies, the CTA Challenge and its participants will get extra scrutiny as we look to evolve the way we evaluate managers for the Challenge as well as for the industry as a whole. The main purpose is to seek out the best talent we can find for our client base.”

This year’s winner will be announced in mid-January 2016 after the Challenge ends on Dec. 31, 2015. Until then, updates on the Challenge are posted on www.CTAChallenge.com, which provides year-to-date rankings, program descriptions and biographies of each CTA participating.

The CTA Challenge has several advantages in surveying trader talent verses traditional CTA databases available to the investing public. Not only is it a dynamic, real world view of a trader’s aptitude, but also provides in depth comparisons of participants as well as a more intricate measurement of performance, according to Mr. Petillo.

“We don’t just look at absolute return,” Mr. Petillo explained. “We use a recalculated daily risk adjusted return algorithm that takes into account volatility and drawdown levels, so the top performing CTA programs aren’t always those with the greatest end of year rate of return.” The CTA Challenge typically has between 20-40 programs competing, and though many are emerging, several established managers have entered, including Abraham Trading, Dreiss Research and Clark Capital Management.

Tim Pickering, president of 2014 winner Auspice Capital Advisors, said that “We entered (our Diversified Program) in the challenge because it is an opportunity to showcase and highlight our abilities versus a diverse and global elite manager pool. Smaller managers, emerging managers, don’t have good representation in most publications and index groups, so it is an opportunity to build awareness that is welcomed.”

The CTA Challenge, which will be adding a three-year track record component, will begin taking applications in October for the 2016 competition. Traders can fill out applications at www.CTAChallenge.com. Once entered, and plugged in, Coquest will perform some standard due diligence and evaluations on their programs and infrastructure. To find current updates on this year’s CTA Challenge, go to: www. CTAChallenge.com.

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