The Hartford (CT) CFA Society recently hosted a workshop on “Pension Risk Management and Governance.” The discussion proved to be mostly, though not exclusively, about ERISA and about how plan sponsors may arm themselves against the sorts of litigation it may inspire. Moderator Martin Rosenburgh, who is both an attorney and a financial analyst, and currently [...]

The SEI asked institutional investors in hedge funds what was the number one reason for their inclusion of such funds in their portfolio. The most popular single choice was "absolute return." On the other hand, if you combine the numbers of the distinct answers that involve limiting the downside, then the percentage of respondents who gave some risk-management focused answer is 56 percent. As SEI says, this is "a marked cultural shift from the early days of hedge funds, when many investors focused on their potential to produce outsided returns."

First, an investor (according to a new white paper on due diligence from Merlin Securities) must decide what kind of strategy it is to which he wants exposure, and generate a list of managers who practice that strategy. Thereafter he can focus on each firm on that list looking at each of the three (qualitative) components of management, and subjecting his impressions to a variety of (quantitative) tests. Tripartite divisions seem to come into play a lot.

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.

We near the third anniversary of the day (December 10, 2008) when the two sons of Bernard Lawrence Madoff informed authorities that their father had just admitted to them that his asset management operation was “one big lie.” One of those sons, Mark Madoff, killed himself one year and one day later. The dimensions of [...]

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.

The true opportunities now lie in taking illiquidity. The panic – for there is no other word to describe this behaviour – today presents those who can afford to have a longer-term investment horizon with a unique time arbitrage.

The hedge fund industry that invests in Asia is increasingly run from within the region, especially from the two hub cities of Hong Kong and Singapore, according to an August 2011 report by Singapore based consult In the early days of the Asian hedge fund industry, Asian strategies were quite generally run from outside of Asia [...]

The world is a fairly small pond in which ripples anywhere soon shake the surface everywhere. Such an observation, like the word “globalization,” has become a cliché, but the truth behind them both becomes quite obvious in the course of a new “Viewpoint” paper by Ernst & Young that examines fund distribution strategies in the [...]

In spite of a difficult fundraising climate, there are some positive things about the current real estate investing environment. Like Scarlett O'Hara, institutional investors seem to think that "land is the only thing that matters."

In spite of sketchy performance from some top managers, institutional investors remain committed to hedge funds and a large number are shopping for new relationships in 2012.

By Christopher Faille One of the great clichés used by reporters, commenters, bloggers and twitterers in recent months has been that the central bankers of the developed world, and/or their Treasuries, have “run out of bullets.” They have “spent all their ammunition” seeking stimulus already and will have nothing in reserve should there be another serious [...]

By Doug Friedenberg We attended a recent meeting put on by Pershing for their prime brokerage clients at which Nouriel Roubini spoke about the near-term prospects for your favorite world, Earth, from an economic point of view.   On a positive note, no large asteroids are currently headed our way, although another prominent economist, Paul Krugman, has [...]

The second in a three-part series on private equity from SEI shows that alpha is a bit slippery these days.

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.

Dennis Lohfert, founder of Ion Asset Architecture, discusses quantitative trading strategies and how they are affected by current market conditions.

Building with BRICs, an interview with Jim O'Neill, Chairman of Goldman Sachs Asset Management

The nature of funds of hedge funds, their scale and, more specifically, the added value they offer to their investors have all evolved over time, and will continue to evolve. In an interview, Brian W. Chung, senior vice president,senior portfolio manager for SSARIS Advisors, a Hedge Funds of Funds affiliate of State Street Global Advisors, spoke [...]

AllAboutAlpha.com interviewed Arzhang Kamarei, a partner at Tradeworx, a quantitative investment management firm with expertise in high-frequency and medium-frequency equity market-neutral strategies.

Just like the rest of us, those who run pension funds put their pants on in the morning one leg at a time. And just like the rest of us, after balking at alternatives post-2008, a growing number are gaining more confidence in them as a way to fulfill their mandates.

Institutional investors have great expectations for private equity, and the right fund managers, willing to meet their “increasingly exacting standards,” will be in a position to listen to “capture part of the growing flow of assets” in that direction.

If everyone is the best, then no one is the best. A look at private equity performance.

By Christopher Faille A presentation by Samuel Kunz, chief investment officer of the Policeman’s Annuity and Benefit Fund, Chicago, to the CFA Institute 2011 Asset and Risk Allocation conference addressed the pros and cons of “risk parity.”  His presentation makes it seem that risk-parity portfolios (RPP) and the Capital Asset Pricing Model (CAPM) are sibling rivals. [...]

In any economic system, the fixed-income market plays an essential role as one of the principal ways of financing enterprise (be it corporate or sovereign).  Research shows that at the end of 2010, the global bond market had amounts outstanding of over US$95 trillion (to put that in context, the World Bank reported the total [...]

Hedge fund assets have bounced back from 2008 to make a new high above two trillion and many performance measures have also more than recovered their losses. Yet it seems most of the inflows are being hogged by the Billionaire's Club, despite studies shouting "Small is Beautiful."

Hedge funds and institutional investors have kissed and made up, according to JPMorgan Prime Brokerage's latest investor sentiment report. Is the relationship really back on track, or are hedge funds just playing the good wife?

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 CMRA/IAFE study of the AXA Rosenberg case shows that model risk may not be on the radar screens of many quant funds.

Institutions continue to favor alternatives as they remain committed to diversifying away from traditional asset classes. The problem, according to Towers Watson's latest survey, is that they aren't necessarily sold on hedge funds, and they certainly aren't thrilled with the price point.

Clients, according to a surprising new report, aren't too keen on alpha at the moment.

Direct investing in hedge funds is currently all the rage among pensions and sovereign wealth funds. But cutting out the middle man, or the expert, can come with a price.

CREATE-Research's annual report takes a closer look at innovation, and how a lack of has prompted institutional investors to wise up when it comes to alternative investments. We beg to differ.

A recent report on the private equity landscape paints a less-optimistic picture of where private equity is headed two-plus years after the financial crisis.

Vikas Shah discusses the "left tail" with Mark Spitznagel, founder and CIO of Universa Investments.

Climate change-focused investment opportunities are increasingly popular among institutions and asset managers. The question is whether they will yield results.

Preqin's latest report overwhelmingly confirms that transparency is here to stay for hedge fund managers vying for institutional capital.

A new report on the needs of institutional hedge fund investors amounts to a manifesto for reform among the world's hedge fund managers.

There's nothing like a good list of acronyms to confuse even the most immersed hedge fund aficionado. A new report by KPMG and RBC Dexia unintentionally takes the industry's affinity for acronyms up a notch.

Traffic at airports, on railroads, and on toll highways is pretty stable. So you might expect investments in these assets to be commensurately stable, but think again...

Investors and managers alike are moving back toward the smorgasbord of different types of alternative investments that is private equity, but there are still signs that indigestion and tummy aches may come back to haunt.

It's tough to argue that private equity and real estate aren't the most intuitive investment this days, but a recent report suggests institutional investors are seeing some promise.

Most sovereign wealth funds have two objectives: to make money and to achieve the state's economic development objectives. Two scholars recently tried to measure the possible "tension" between these competing interests. What they found will be very useful for anyone trying to sell their services to a SWF.

The University of Texas endowment recently revealed that it had nearly $1 billion of gold hidden away in their basement. This might be a good time to revisit whether US endowments are really that smart.

Much to the chagrin of activist hedge fund managers, poison pills are making a comeback - in new and more lethal forms. For managers in particular, reading the label and following the directions is more important than ever.

It's getting easier to lead an institutional manager to illiquid strategies - not water - according to a recent survey by eVestment Alliance and Casey Quirk. But after what happened in 2008, why would they drink?