Comparing the different editions of the Axioma Quarterly Risk Review for 4th Quarter 2011 leaves some fascinating insights. For example, it is becoming more difficult over time, in much of the world, for investors to create significant diversification within the (domestic) equity portion of their portfolio, because the correlations of stock pairs have been increasing.

In keeping with our mission to provide a marketplace of ideas, today's post presents two views of a paper that deals with the banking rules, which directly affect the core of the financial services industry and its future stability.

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."

Could it be that truth is finally stranger than science fiction? The next battle of the quantitative trading strategies may offer some algorithmic features that look downright qualitative.

Managers were asked: “other than delivering expected performance, what is the greatest challenge in satisfying investors?” The results were: getting investors comfortable with infrastructure, 22 percent; providing satisfactory performance attribution data, 19 percent; providing broader education/consulting, 18 percent; providing satisfactory risk analytics, 11 percent; other, 28 percent. The residual answer produced more favorable replies, then, than did any of the pre-scripted answers.

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.

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

It is true by definition that the crowd is right in the midst of a trend, and wrong at the moment when that trend is about to reverse itself.  In the Asia Pacific region, broad confidence in opportunities for private equity surely constitutes by now, a trend, even a parade. Whether it is the sort [...]

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.

According to the latest research, confidence in family office investing is back.

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

Risk Aggregation has been expensive, and prohibitively so for some, whether it’s in-house or out-sourced. That may be about to change, but just as Skype phone calls are not always the best quality, so too some investors will still want to go further than the free solution.

Some new research shows that it may be possible to mathematically determine a bubble before it forms, let alone pops.

By the end of Q3, the headwinds of 2008 and tailwinds of 2009 had become a distant memory. By comparison, this year looks like a it may be remembered as dead air.