Barry Ritholtz, Columnist

Simon Lack on the 'Hedge Fund Mirage'

So many hedge funds, so little alpha.

March 13, 2017 at 5:30 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.”

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This week on our Masters in Business radio podcast, we speak with Simon Lack of SL Advisors LLC, and author of “The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True.” Lack previously sat on JPMorgan Chase & Co.’s investment committee, allocating more than $1 billion to hedge-fund managers. He founded the JPMorgan Incubator Funds, two private-equity vehicles that invested in new hedge funds.

We discussed the challenges of finding those rare managers who generate above-market returns, or alpha. He places the blame for poor hedge-fund performance squarely on the professional investor class. Surprisingly enough, these investors allocate capital without sound information and display excessive willingness to chase last year’s hot fund.