Simon Lack, a former JPMorgan executive, says that if all the money ever invested in hedge funds had been put in Treasury bills, the results would have been twice as good. This—coming from a man whose job it was to direct money into hedge funds—is tough to refute, even for Andrew Baker, chief executive of the Alternative Investment Management Society. Lack contends that investors put money in hedge funds after the performance was good—after the fund has become bloated with new money. “Funds were smaller and, as a result, many strategies were available that simply don’t scale with the size of today’s industry,” Lack said. So, what advice does Lack have for investors? “Selecting simply the best 2-3 funds one can find may well be the best approach.”

Read the story.