Christopher Langner is a markets columnist for Bloomberg Gadfly. He previously covered corporate finance for Bloomberg News, and has written for Reuters/IFR, Forbes, the Wall Street Journal and Mergermarket.

Investors have been berating hedge funds over the past year and asking how they can justify the high fees they charge. But perhaps it's time for those putting the money in to question their own judgment.

Looking at fund flows into various strategies, it seems there were some pretty poor decisions made. The game plan that received the most new cash over the 12 months was managed futures, attracting a net $10.3 billion, according to industry researcher eVestment. Managed-futures returns for 2016, however, came in at a paltry 1.1 percent, Eurekahedge data show, just a sliver more than what sinking funds into 2.25 percent Treasuries due 2025 would have got you.

Not a Clue
Managed futures hedge funds, which invest in commodities and derivatives, did well at the start of the year but then plunged. Investors kept putting money in regardless
Source: Eurekahedge; Bloomberg

Meanwhile, investors pulled more than $6 billion out of funds with a focus on distressed debt. Silly them. Buying bonds from companies under financial duress returned 13.3 percent last year, one of the best outcomes around.

Don't Stress
Distressed debt saw heavy redemptions in 2016, in spite of being one of the year's most successful strategies
Source: Eurekahedge, Bloomberg

Also not finding any love -- funds that make money from betting on mergers and acquisitions or unexpected corporate news. Event-driven strategy funds saw $38.5 billion of redemptions in 2016, the most of any category, yet returned a very robust 9.1 percent.

Unforeseen Luck
Managers who focus on extracting returns from unexpected events such as mergers and acquisitions got no love from investors, yet they rewarded the faithful handsomely
Source: Eurekahedge; Bloomberg

Overall, the hedge fund industry witnessed redemptions north of $100 billion last year, an amount that's sparked much hand-wringing. Already, some managers are reducing their fees and, as I have argued before, that's entirely appropriate considering the more competitive environment that's making alpha an endangered species.

But, for all their sins, perhaps it's those people giving hedge funds the money who should also do some soul-searching before they cast stones.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Christopher Langner in Singapore at

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Katrina Nicholas at