Barry Ritholtz, Columnist

Why Investors Love Hedge Funds

Why do investors keep putting money into hedge funds when so many of them underperform?

April 21, 2014 at 12:05 PM UTC

Barry Ritholtz is a former Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

Look hard for a hedge fund that's a winner. Photographer: Munshi Ahmed/Bloomberg

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Larry Swedroe, research director for BAM Advisor Services LLC, noted earlier this month that total hedge fund assets under management, or AUM, reached $2.63 trillion. This represents a sizable increase, despite fund performance generously described as lackluster.

The increase in assets under management led to some interesting discussions. Lots of readers had e-mailed me with comments on both alpha -- market-beating returns -- and fee generation after last week's column, ``The Hedge-Fund Manager Dilemma.''