Benefits of Equity index futures

I believe equity Index Futures offer greater tax benefits because they generate fewer capital gains due to tax structure of futures products vs. equity products. Additionally, investors are not required to sell securities to meet cash redemptions or potentially generating capital gains tax liability. Keep in mind that the sale of an equity index future contract will generate capital gains/losses for the investor liquidating.

I totally endorse this aspect of index futures. Because each equity index futures contract represents a basket of securities, it inherently provides diversification across an entire index. Equity Index Futures cover virtually every segment of the equity market, providing an easy and convenient way to adjust the investment mix of a core portfolio.

One thing about Equity Index Futures that only experts know is that it can be purchased, highly leveraged and sold short, which has opened up risk management strategies for individual investors that were once available only to large institutions. For example, they can be sold short to hedge a core stock portfolio or interest rate fluctuations. This allows investors to keep their portfolio intact while protecting them from market losses. In a declining stock market or rising interest rate environment, profits from a short position can offset some of the losses in a portfolio.

Equity Index Futures have often been used to "equitize" cash, providing a way for investors to put cash to work in the market or maintain allocation targets while determining where to invest for the longer term. So this assists you in decision making.