It never ceases to amaze me how hope spings eternal about hedge fund success despite the evidence to the contrary.
Warren Buffet seems to know which side to be on in the debate from the FT
The hedge fund managers have done very well over that period,” Mr Buffett said, noting that, on a notional $1bn portfolio, they would have made $20m in management fees “just for coming to the office. The investors in the hedge funds have paid a very big price.”
Apparently the hedge fund industry has a new marketing approach:
So why is money still pouring into the hedge fund industry? The answer is that investors do not think of hedge funds as an alternative to stocks, but more often now as an alternative to bonds. Mr Buffett’s comparison is no longer a fair one — and the consequence is that the industry’s meagre returns will not improve any time soon.
It seems most investors should be happy they dont make the cut as "accredited investors" eligible to invest in hedge funds. But they should be wary of "hedge fund like" investments they can have access to.
Interesting btw that Buffet chose to make the wager an index fund and not Berkshire Hathaway performance vs the hedge funds.
And from the NYT