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AIMA has released important new research co-commissioned with KPMG. It’s by the Centre for Hedge Fund Research at London’s Imperial College and it examines industry performance, volatility and risk.

It finds that for the period 1994-2011:

• Hedge funds have significantly outperformed traditional asset classes like equities, bonds and commodities
• Hedge funds were major generators of “alpha”
• Hedge funds achieved these returns with considerably lower volatility and Value-at-Risk (VaR) than either stocks or commodities
• In fact their volatility and Value-at-Risk were similar to bonds
• A very substantial majority of hedge fund profits went to investors (not as some allege, to managers)
• An investor portfolio equally balanced between HFs, bonds and equities would out-perform a traditional 60/40 allocation to stocks and with lower tail risk and higher Sharpe ratio

Worth Magazine's Karen Hube recently published a piece "10 ways to invest in water". For US Investors, accustomed to abundant and free water, getting used to the idea of water as a commercial commodity take stime. Don't let it take too long. Analysts expect water to evolve into a widely traded equity over the next decade.

Why ? The world's propulation is growing, but water resources aren't. Quite the opposite. Climate change is redirecting water to some regions and away from others. And some 1 billion people worldwide lack access to fresh drinking water while 2.6 billion lack adequate sanitation systems. Not to mention the fact that we are expected to add another 2 billion new people to this planet over the coming 30 years.

Scared yet ?  Here are 10 water related sectors that long term investors should be aware of.

Here's a link to the magazine: Its worth (excuse the pun) subscribing to:  http://worth.com/index.php

We covered the subject in our recent educational piece:  "Investing in Vital Assets" 

Companies and countries have experienced ups and downs in the worldwideclean energy race in recent years, and 2011 was no exception. For consumers, however, the clean energy race has been consistently positive, driving down prices and interjecting new renewable energy choices int oa marketplace dominated by century-old technologies. Price competition is the defining characteristic of the clean energy race in 2011, spurring investment and deployment, increasing global clean energy capacity, and creating opportunities for innovators, entrepreneurs, and workers.

The clean energy sector continued its decade-long rally by attracting $263 billion worth of investment in 2011. Excluding research and development spending, investment in the sector is now more than 600 percent higher than in 2004, when reliable data collection commenced. As a result of this rapid growth, the clean energy sector recorded its trillionth dollar invested in 2011.

Here are a couple excerpts from the report extracted by Anric Blatt

During the next 10 years, many regions will experience water challenges – shortages, poor water quality, or floods – that will increase the risk of instability and state failure, increase regional tensions, and distract them from working with the United States on important U.S. policy objectives. Between now and 2040, fresh water availability will not keep up with demand absent more effective management of water resources. Water problems will hinder the ability of key countries to produce food and generate energy, posing a risk to global food markets and hobbling economic growth. As a result of demographic and economic development pressures, North Africa, the Middle East, and South Asia will face major challenges coping with water problems.

While wars over water are unlikely within the next 10 years, water challenges – shortages, poor water quality, floods – will likely increase the risk of instability and state failure, exacerbate regional tensions, and distract countries from working with the United States on important policy objectives, according to an assessment prepared by the U.S. Intelligence Community (IC).

Final Report from the Commission on Sustainable Agriculture and Climate Change

• The OECD Environmental Outlook to 2030 provides analyses of economic and environmental trends to 2030, and simulations of policy actions to address the key challenges. Without new policies, we risk irreversibly damaging the environment and the natural resource base needed to support economic growth and well-being. The costs of policy inaction are high.

• But the Outlook shows that tackling the key environmental problems we face today -- including climate change, biodiversity loss, water scarcity and the health impacts of pollution -- is both achievable and affordable. It highlights a mix of policies that can address these challenges in a cost-effective way. The focus of this Outlook is expanded from the 2001 edition to reflect developments in both OECD countries and Brazil, Russia, India, Indonesia, China, South Africa (BRIICS), and how they might better co-operate on global and local environmental problemsolving.

"A great blueprint for combatting climate change." —Brian Walsh, Time

"[Brown's] ability to make a complicated subject accessible to the general reader is remarkable..." —Katherine Salant, Washington Post

"In this impressively researched manifesto for change, Brown bluntly sets out the challenges and offers an achievable road map for solving the climate change crisis." —The Guardian

"4.0 is the best yet! If there are planetary heroes, you are top of my list." —David Orr, Oberlin College

"It's the best summation of humanity's converging ecological problems and the best roadmap to solving them, all in one compact package." —David Roberts, Grist

"If you want to know the future of Planet Earth, there is one good place to look. It is a book entitled 'Plan B 4.0: Mobilizing to save Civilization.'" —Bill Boyne, Post-Bulletin

"It is great to see how some gifted people can condense a very broad and diverse area into easy to swallow, but tremendously important bits." —Harry B. Davis, Ph.D

"Dr. Lester Brown is one of the most important voices in the world, regarding the creation of a new conscience of humanity toward a sustainable society." —Jose Jaime Maussan

McKinsey Global Institute

McKiney Sustainability & Resource Productivity Practice

Over the past century, progressively cheaper resources have underpinned global economic growth. The unprecedented pace and scale of economic development in emerging markets means demand for resources is surging. The spillover effects into environmental factors will affect every human on the planet. This report looks in detail at this critical challenge.

Big Spenders: the outlook for the oil and gas industry in 2012 is an economist Intelligence Unit report which analyses the oil and gas industry outlook from the point of view of top-level operators, including CEOs and other board-level executives and policymakers. The report has been commissioned by GL Noble Denton.

The High-level Panel on Global Sustainability presents its report to the Secretary-General on 30 January 2012 in Addis Ababa.

The 22-member Panel, established by the Secretary-General in August 2010 to formulate a new blueprint for sustainable development and low-carbon prosperity, was co-chaired by Finnish President Tarja Halonen and South African President Jacob Zuma. The Panel's final report, "Resilient People, Resilient Planet: A Future Worth Choosing", contains 56 recommendations to put sustainable development into practice and to mainstream it into economic policy as quickly as possible.

Resilient People, Resilient Planet: A Future Worth Choosing (full report)

* Please note that the full report has not yet been formatted as a publication. The publication version will be available in mid-February 2012.