A commodity pool is an investment structure where many individual investors combine their moneys and trade in futures contract

Futures contract

In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...

s as a single entity in order to gain leverage. They are analogous to mutual fund

Mutual fund

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...

s wherein a fund is similarly set up expressly for trading in equity

Stock

The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

, except that mutual funds are open to public subscription whereas commodity pools and hedge fund

Hedge fund

A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...

s are private.

Commodity pools are also called "managed futures funds". The name "commodity pool" is a National Futures Association

National Futures Association

The National Futures Association is an independent self-regulatory organization and watchdog of the commodities and futures industry in the United States. The NFA oversees and protects investors from fraudulent commodities and futures activities. The NFA also provides mediation and arbitration...

 (NFA) legal term. In the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, the Commodity Futures Trading Commission

Commodity Futures Trading Commission

The U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....

 (CFTC) and the NFA, as opposed to the Securities and Exchange Commission, regulate commodity pools.

Many hedge funds are commodity pools. Funds that trade in commodities, which include many of the largest funds engaged in macro-strategies, are registered with the Commodity Futures Trading Commission as commodity pools and as commodity trading advisor

Commodity trading advisor

A commodity trading advisor is an asset manager who follows a set of systematic investment strategies in futures contracts and options on futures contracts. The advisors originally operated predominantly in commodities markets, but today they invest in any liquid futures market. They are...

s (CTAs). In an address to the Securities Industry Association in 2004, Sharon Brown-Hruska, acting director of the CFTC, said that 65 of the top 100 funds in 2003 were commodity pools, and 50 out of the 100 largest hedge funds were CTAs in addition to being commodity pools.