The Global Association of Risk Professionals has surveyed risk managers, analysts and academics to get a sense of the implications of the demise of MF Global Holdings for the role of risk managers. Its findings add to a growing sense that the firm’s last chief executive, Jon Corzine, a former New Jersey Governor and U.S. Senator, was an edge-dwelling trader at heart, eager (as Dealbook put it in an analysis in December) to play a “hands-on role in the firm’s high-stakes risk-taking;” indeed, a man enmeshed in a “romance with risk.”

AIMA, in a report sharply critical of the proposed European Union financial transaction tax, sets out the way in which the tax could burden businesses, and their consumers, to a degree far greater than the proponents contend. After all, any single product may pass through several stages between raw materials and final consumer, as there are several steps between farmer harvesting wheat and retail outlet, such as Tesco, selling pasta. Businesses at every stop along the way (farmers, wheat processers, pasta extruders) will naturally want to hedge their own operational risks in the financial markets, so the price of the finished product will reflect the repeated imposition of the FTT.

IMF economist Manmohan Singh, in a recent working paper for the IMF, makes a case that pledged collateral is a critical financial lubricant, and that since the collapse of Lehman in September 2008 there has been a significant and troubling decline in its supply. Certain measures intended by regulators to enhance financial stability may in fact undermine it, by worsening the supply/demand mismatch, in effect creating a grey market for this pledged collateral.

On Oct. 30, a Sunday, the Commodity Futures Trading Commission received a draft report from MF Global that for the first time showed a shortfall in the segregated funds, a deficit of $900 million. At this time, both MF Global and the CFTC were referring to this in anodyne terms as an “accounting error.”

A recent meeting of an advisory group of the CFTC discussed the proper definition for high frequency trading, on the premise that only once a definition is in place can there be focused monitoring of the consequences of HFT.

Financial crises always turn up new risks – and new opportunities. Famously, George Soros bet against the Bank of England during a fiscally challenged time in the early 1990s and pocketed a billion and change for his troubles. Was that a spectacular guess in a geopolitical game of chicken, or was it true alpha? We don't know, because we don't have the data. Currencies didn't much matter then; they do now.

The Commodity Customer Coalition has now issued a white paper presenting its own view of the “background, impacts, and solutions to MF Global’s Demise.”

Amongst equity long-short funds, which constitute about half of the Asian hedge fund universe, the returns of hedge funds “were sometimes mean reverting but at other times displayed persistence in positive/negative momentum.” That is to say that sometimes a coin that has come up heads three times will come up tails the fourth time, but at other times it will persist in coming up heads the fourth time.

Even against the backdrop of a global recession, the top 50 fastest growing companies in the USA averaged growth rates between 3,893% and 40,882% in the three years to the start of 2011.  These are rates of return which more than compensate the investor for the risk of making high-growth-young-company-investments.  For some investors, alternative markets [...]

By Christopher Faille The ideas of “cause and effect” seem simple enough when left unexamined. The cue stick hits the cue ball; the cue ball hits the eight ball; the eight ball rolls into the pocket. How can anyone fail to understand this?

There is an old story often attributed to economist Burton Malkiel. A professor of finance and an undergraduate are walking together. They see what looks like a $100 bill lying on the sidewalk. The naïve student bends down to pick it up, but the professor says, “Don’t bother. If it were a real bill, it [...]

Commodities have been the big story of the past decade – almost a repeat of the inflation-burdened 1970s. If hems reflect stock market sentiment, we should be seeing an outbreak of bell-bottom trousers and platform shoes. Certainly, a new cohort of investors, institutional and retail alike, see price rises in the elements core inflation strips out – namely food and energy – as a secular shift. Still, appearances can be deceiving. A recent study argues a long-only bet on commodities is likely to result in a return that is statistically 0: not the 1970s at all.

Jeremy King of Knight Pacific discusses his contrarian views on investing in Asia.

Diversification – particularly of risk – is the “a” in alpha. At first sight, commodities earn an “a.” Certainly they have attracted attention from institutional and retail investors alike. Most of those are long-only portfolios – as in “l.” They are a “p” for poor, “h” as in hedge in “a” for adverse markets.

Chris Brodie has been trading commodities for over 20 years, and set up Krom River in 2006. Scotsman Brodie relocated to Zug in Switzerland several years ago and has no regrets about the move. The fund’s best year so far was 2008 when it rose by 37% while the GSCI fell by two thirds, and it was also up in August of this year. Krom River are running both discretionary and systematic funds, and also have a dedicated agricultural vehicle. We touched on a range of topics that CAIA candidates and charterholders will be familiar with. Krom River is a signatory of the Hedge Fund Standards Board that has been discussed on AAA.

The concept underpinning financial exchanges can be traced back through much of human history. In Aristotle's Politics, "...there is the anecdote of Thales and his financial device.... he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having little capital, he gave earnest-money for the use of all the olive-press in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many wanted them all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money..." While technology has moved on, the basic principle of futures and options exchanges remains the same. Participants in the market can take the role of Thales (using their insight to bet on price increases), the olive-press-owners (who hedged that Thales' price for the future was higher than they would otherwise get) or even investors who provide 'earnest money' to Thales (assuming markets will rise) or fund the olive-presses (assuming prices will fall).

International Monetary Fund research shows that speculation does not influence the commodities markets.

New research from the Managed Funds Association looks at the state of the pension fund industry and examines the role that hedge funds can play in order to improve institutional investors' positions.

A new academic paper suggests oil and other resources are spiking and retreating thanks to speculative activity, including trading by hedge funds. From our viewpoint: duh...

By Christopher Faille On August 11, Credit Suisse’s Asset Management Division issued a new white paper, “Commodities Outlook: Increased Volatility, Increased Opportunity?”  This paper takes the long view of the issue of returns on commodities, taking us back to the 1970s – not to commune with our inner John Travolta or Donna Summer, but in order [...]

This is the first of a new series called "Alpha Hunters." The nimble qualities of alternative investments is part of what makes them essential to every investor's portfolio. They can move quickly to take advantage of market inefficiencies and go where other more traditional investment vehicles cannot. It is in the spirit of seeking the ever-moving alpha that we introduce this series, reaching out to experts in different strategies to see where they are finding alpha. We hope you find this series illuminating and please feel free to send suggestions for Alpha Hunters you'd like to read about. Kristin Fox Managing Editor

A paper published by he European Central Bank this month argues that purely-financial investors do indeed "destabilize" oil prices by indiscriminately allocating capital to oil futures.

A new survey of diamond auctions finds that diamonds are as Sharpe as bonds. Really.

A new academic paper points a finger at hedge funds for accentuated volatility in energy markets. Unfortunately, it's the finger one might deem impolite.

By Steve Deutsch, MBA, CFA, CAIA, AllAboutAlpha Editorial Board Who would have thought investment ideas would come from the 1970s television series Green Acres? However, it looks as though Eddie Albert and Eva Gabor may have been well ahead of their time when they left New York’s Park Avenue for greener pastures.

To limit, or not to limit? That is the question FSA Chairman Lord Adair Turner attempts to answer in a new paper on commodity holdings limits.

Managed futures and hedge funds aren't exactly best friends, but a new report suggests investors should have the two together as a way to generate alpha the next time a black swan shows up.

There are some pensions who're sure, all that glitters is gold. And they're trying to make hay in twenty-eleven...

As always, the key point in commodity investing: it doesn't have to be directional to be lucrative.

A survey of pension funds and endowments by Deutsche Bank indicates that investors see themselves as having two options to dig themselves out of their current hole: aim for higher returns by dumping equities overboard, or waiting around for interest rates to take care of their liabilities.

Regardless of its source, negative roll yield is an uphill battle for those trying to make money in commodity markets. But is it surmountable? The short answer appears to be "yes."

Commodities jig and jag and jump on their own time – or on world economic time. But all that jazz may not be so memorable for the long-term investor.

After a decade of change, debate brews about the appropriate role of commodities in institutional portfolios.

As alternative investors know, money does grow on trees after all. The trick is: how to harvest it.

We're reporting from the Cayman Islands this week on the post-12/11 future of hedge fund operations and due diligence.

Sophisticated institutional investors are redefining the term "tree hugger".