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Barry Ritholtz

The Search for New Love in Hedge Funds

Too bad so many of them haven't learned that the chase is futile.

Money for nothing, or at least underperformance. — Money for nothing, or at least underperformance.
Photographer: Thomas Trutschel/Photothek/Getty Images

By

January 27, 2016, 4:58 PM UTC

I am fascinated by what I have been calling the hedge fund paradox: For ages, all but the top funds have lagged behind benchmarks for one-, five- and 10-year holding periods. Despite this, many of these funds continue to attract a torrent of money.

Why is it that in the face of underperformance, investors still seem to love hedge funds?