Hedge fund debate turns into fight over best way to play

Date: Thursday, March 4, 2004

Andrew Willis- Globe & Mail- The hedge fund crowd staged a formal debate in Toronto yesterday, with the best of the British parliamentary tradition on display between opposing camps.

For an outside observer, the event was a yardstick for just how far this sector has come. Two hundred institutional investor types didn't meet to argue about the validity of the concept. They fought over the best way to play hedge funds.

And after all the pomp and ridicule that comes in the best debates was done, the way forward was clear.

In a lunch organized by the Alternative Investment Management Association, or AIMA, Standard & Poor's vice-president Steven Oyer took the government's view, arguing that an index of hedge funds is the superior way to play this game.

Mr. Oyer was talking his own book: S&P sells a hedge fund index product.

The opposition came from Tristram Lett, who runs the alternative investment arm of RBC Dominion Securities.

It's a shame Mr. Lett won't take the pay cut needed to run politically, 'cause he's missed his calling. Referring to the "adipose and gas" of his learned opponent marked some sort of high-water mark in financial discourse.

In this observer's book, Mr. Lett successfully made a case for hedge funds as one of the few places that investors can earn consistent absolute returns.

And in addition, he soundly defeated the notion of playing the sector through indexing, which he called "a poorly run fund of funds strategy."