Government should make public the investment allocations and performance of the $1 billion in public funds - most of it pension funds - that is being invested, said the Opposition United Bermuda Party in Friday's House session.

Finance Minister Eugene Cox told his House colleagues that he had no objection to doing so.

In a debate that mirrored a previous one on the same subject last month, the Opposition expressed considerable concern at Government's decision to allow pension funds to be invested in hedge funds, considered by many to be among the more risky investments.

The Island's legislators had recently passed an amendment allowing the Finance Minister to expand the list of approved securities in which public funds can be invested in by making an order subject to parliamentary sanction.

Friday's debate concerned the first such order. Added to the list of securities were mutual funds, investments trusts, investments companies and limited partnerships as well as futures contracts, options and forward contracts.

"The types of securities proposed are commonly found in other similar pension plans and, therefore, this is another step being taken to modernise the management of the pension funds," Mr. Cox told the House.

"By adding such securities, it will enable investment managers to invest in a broader variety of investments, such as hedge funds, private equity funds, real estate investment trusts, as well as being able to utilise forwards and futures and options to minimise the various currency, interest rate and other risks in the various portfolios".

The Opposition continued to be nervous about exposing the Island's pensions to hedge funds, despite Mr. Cox's emphasis that there will be a cap on such investments.

"Members of the public are advised that in selecting the different types of securities purchased or investments made, Government's goal is to maximise returns at a prudent level of risk. This requires balancing market volatility with long term goals," said the Minister.

"Furthermore, the total investment in each category of investments will be controlled and where necessary, limited to prudent amounts. For example, investments made in private equity hedge funds will be limited. By controlling such investing, the pension funds exposure to down side risk will be limited.''

Shadow Finance Minister Grant Gibbons, called for transparency and an approach of "prudent conservatism" in investing the people's money. He stressed that the amount in question was not really a lot of money, compared to other pension funds such as California's which runs into double digits in the billions, "But nonetheless it is very important," he added.

He said that there was no reason why the public which is becoming increasingly sophisticated in financial matters, should not be informed on an annual basis of the details of the investments.

Turning his attention to hedge funds, he reminded his colleagues of a string of recent highly publicised disasters and he pointed to a Financial Times story which reported that the UK Financial Services Authority had warned of the dangers of hedge funds citing lack of transparency and increased risks.

The theme was picked up by Opposition MP Cole Simons who added that the US Federal Reserve had guidelines which precluded hedge funds investment.

"If it's not good enough for the US Federal Reserve, it's not good enough for me and it shouldn't be good enough for the people of this country," said Mr. Simons.

Dr. Gibbons issued a warning to the public funds investment committee. "It's very easy to get caught up in terms of maximising returns but it's also easy to lose a lot of money," he said.

Backbencher Arthur Hodgson's contribution to the debate was a speech with strong religious themes in which he emphasised that ownership was more important than being an employee. "Capital accumulation is absolutely essential in bringing about empowerment of people who have been unempowered," he said.

His remarks were greeted with laughter when he ventured into biblical references. But Mr. Hodgson persisted.

"There are people who would say this order is irrelevant to all the other discourses. But unless we have the accumulation of capital through investment, we will never solve our problems''.

Speaking for the Government Telecommunications Minister Renee Webb told her House colleagues that there were strict performance guidelines in place for the investing of the funds and managers who are not up to scratch will be withdrawn. No more than five percent of the funds will be invested in hedge funds, she said.

"We in Bermuda are no different from everybody else. We are investing conservatively and we do have strict guidelines," Ms Webb said.

"There must be some public accountability," insisted Opposition Leader Pamela Gordon, continuing the call for an annual publicised report. She said that her party's position should not be taken as an attack on the Government's integrity.

"I believe the Minister's intention is an honourable one," she said.

In his response to the debate, the Finance Minister said that the UBP was engaging in "hedge fund hysteria".

He said that the management of the funds had been greatly improved - with greater diversification, establishment of performance criteria and strategies to mitigate effects of market volatility.

On the call for publicising the investment guidelines he said : "If the members want it published we will publish them".