TY - JOUR T1 - Futures versus Physicals JF - The Journal of Investing SP - 17 LP - 30 DO - 10.3905/joi.1999.319433 VL - 8 IS - 4 AU - M. Barton Waring AU - Firouzeh Attwood Y1 - 1999/11/30 UR - https://pm-research.com/content/8/4/17.abstract N2 - The typical institutional investor holds portfolios of securities. For international investors, there has been much discussion in recent years about holding baskets of futures contracts in their place. This article identifies the effects that differentiate these two alternatives in risk and return space. An investor can use the process to analyze whether futures or physical securities are more appropriate to a particular investment need. In particular, shorter investment horizons - which can include tactical movements - favor futures, while longer-term investments favor physical securities. The article considers fifteen different variables that can affect this outcome, including transactions costs (including impact costs), taxes, investment management costs, securities lending revenues, various contributors to tracking error, custody and clearing costs, and flexibility. ER -