Hedge fund joke?

Hedge fund joke? Index idol, beta bandit and a hedge fund manager are flying in to deliver investment presentations to clients. As the plane comes in to land, they see ONE purple sheep alone in a field.

Professor Passive says "Sheep here are purple! I must buy them ALL, now, at ANY price the owners ask, no matter how high or overvalued. It's not my money. No need to understand ovine business or earnings. Forget about analysis or due diligence. Ignore sheep risk! Prices are always correct as markets are efficient. I have academic tenure and Swedish taxpayers gave me a fake 'Nobel' in economic 'sciences'. Risk free...for me." 

Beta Bandit says "Some sheep here are purple but the professor says they all are. I am benchmarked to the index so I must also buy that purple sheep no matter how expensive. Can't risk tracking error and not being fully invested or conflicted consultants I bribed to be on their "recommended" lists might remove me. It's not my money either. I get same fees whether muppets win or lose." 

Hedge Fund says "That single sheep may seem purple but my machines have deep learnt that nothing should ever be sold short or bought without regard to value or price. My clients are pension retirees, widows, orphans, university endowments awarding student scholarships and foundations funding good causes so I do much deeper analysis. Our interests are aligned all as my wealth and family and friends savings are in the fund. I study potential investments very closely so that ABSOLUTE liabilities and foundation grants can be paid from ABSOLUTE RETURNS.

It's fiduciary duty. I'm only paid well if, and only if, I make absolute money for clients. Unlike you I invest as a prudent man. You guys are breaking suitability and fiduciary rules for your unfortunate investors. Doing no analysis or due diligence before buying an alleged purple sheep at any price? What are the outrageous fees you charge for your so-called "work" actually for?

There seems to be a sheep, one side of which appears to be temporarily purple. This may be due to chemicals in the sheep-dip, an accident with dye or paint, an optical illusion, a practical joke or a smudge on the airplane window. I will closely study sheep fundamentals and contact shepherds, shearers and wool merchants with extensive ovine expertise.

My data wrangling team will gather petabytes of global ovine data and conduct rigorous statistical analysis, mathematical modeling, stress tests and scenario simulations. Perhaps, after exhaustive research, I might be able to decide whether to short sell or even buy that apparently purple sheep, depending on its value and risk. Most potential investments we analyze, we end up avoiding.

The Nobel Foundation, the professor's university endowment and long only dude's pension plan are my clients because they need the absolute returns I deliver irrespective of market direction or beta factors. You can't buy food, pay faculty or meet liabilities with relative returns in bear markets. Professor Passive's employer is able to offer student scholarships and pay his vast, tenured salary because it avoids his beloved, high risk passive funds. Too volatile."

Which manager should YOU invest with? Who should get the $billion mandate? Who is most likely to generate RELIABLE risk-adjusted returns? Whose fees represent the best VALUE for the work? What manager is really the "cheapest"? Which fund offers alignment between client and manager interests?

Would investors following the prudent man rule choose a passive fund given the fiduciary duty for due diligence in selecting appropriate investments for beneficiaries? Passive funds doing no security analysis or risk management are clear breach of fiduciary duty. Too expensive and risky for anyone, especially you.