Whether you love or hate the term "liquid alternatives," it looks like it's here to stay, at least for the time being.

Especially now that there is an annual conference carrying that title, and not just one, but an East Coast and a West Coast version. IIR USA hosted its second Liquid Alternative Strategies West event earlier this week, and the new name is probably an improvement anyway from the previous, lengthy "Alternative Strategy Mutual Fund Forum" title.

About 130 representatives from mutual funds, distributors, lawyers, accountants and other service providers gathered at the Hyatt Regency at Fisherman's Wharf in San Francisco to discuss setting up alternative mutual funds; sales, distribution and marketing strategy; different kinds of offerings in the space, and legal implications. And, of course: eat, drink and be merry. (The cocktail reception, sponsored by law firm Dechert LLP, took place on Monday night and had a superb selection of cheese!).

Brian Jacobs, the newly minted president of Direxion, chaired the event and kept peppering the panelists with interesting questions. The speakers were a star studded list of leading alternative industry and mutual fund experts, from Pimco's Doug Hodge to Cliffwater's Steve Nesbitt, as well as product development gurus from AllianceBernstein and BlackRock and representatives from Ultimus and ALPS.

Hodge, who opened the conference following Jacobs' introductory remarks, talked a lot of macro-level economics and "the evolution of the investment management industry," invoking Charles Darwin's famous quote: “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change.”

However, many of the conference goers found Hodge's comments to be too big-picture and not enough nitty gritty. Word has it, Hodge first got the speaking gig when he was Pimco's chief operating officer and was supposed to talk specifically about the firm's liquid alternative capabilities, but since getting promoted and Pimco having run into a bit of reputation trouble, seemed to have his hands (and lips) somewhat tied. He also promptly vanished after giving his speech.

John McColskey, president of $1.35 billion Meritage Portfolio Management, in a panel on Liquid Alternative Product Development was dwarfed by the sheer size of the other speakers: Evan Mizrachy of BlackRock and Sandra Testani of AllianceBernstein. In fact, when the Q&A sessions started, attendees kept posing their questions to "the two giants" and avoiding Meritage. Poor little guy!

One unlikely speaker was a last-minute stand-in for Altergris' President and CEO John Sundt who was a no-show due to a family emergency, so Alkesh Gianchandani, director of the global client group in alternatives and fund solutions at Deutsche Asset & Wealth Management, wound up taking his spot and talking about some liquid alternative funds that Deutsche Bank runs that can still pay performance fees to managers, which is usually unheard of in mutual fund land. After a drawn-out discussion that left many attendees confused, he finally fesed up that he was talking about 3C7 fund structures and not '40 Acts. D'oh. Many conference attendees spent the rest of the conference scratching their heads about what he was doing there. But, someone needed to replace Sundt, after all.

One of the early entrants into alternative mutual funds, Rick Lake from Lake Partners was apparently really tired, either from being in this game for so long (15 years!) or from the jet lag. Maybe both. He confessed that he couldn't stay awake unless he had, specifically, Dunkin Donuts coffee, and there was none to be found in San Francisco, so he told conference goers he'd have to stand up and pace back and forth during his presentation, so as not to fall asleep in the middle of it.

The question of "what is an alternative?" or "how do you definite an alternative investment?" came up, oh, about a dozen times, if not more. But Nesbitt's definition seemed to make the most sense. He said his alternative investment consulting firm, Cliffwater, defines them as investments that have a 0.75 or less correlation to the equity markets.

At a panel on distribution, Tina Singh, chief executive of the third party marketing firm TS Capital, talked about the number of wholesalers the big firms employ. It apparently ranges from 75 and 250 for many of the large firms like BlackRock, AllianceBernstein, PIMCO, etc. And these individuals get paid somewhere in $400,000-$500,000 of annual salaries alone. Now, before you all go running to apply to wholesaler jobs, keep in mind that these people are very, very busy. As a few ladies at a women's cocktail hour after the conference discussed, some of these people are expected to go on as many as 30 meetings per week.

All in all, the conference was done in two days, with the organizers packing a few concurrent sessions into the agenda side by side and letting everyone loose at 4pm on Tuesday. Some people went to dinner parties afterward, some went to Giants' games. Accounting firm Rothstein Kass, for instance, hosted a dinner party at the hip Credo restaurant in downtown San Francisco on Monday night, where representatives from Rothstein Kass, Dechert, as well as mutual fund execs and other service providers, gathered to imbibe on four courses of delicious Italian faire and seemingly endless amounts of wine. Proving, once again, that lawyers and accountants really do know how to party.

Further coverage of the panels and keynotes to come. 

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