Kicking Hedge Funders When They're Down

Ouch! The Hedgies of Greenwich and elsewhere on the Fairfield County Gold Coast must be wincing. BloombergBusinessweek delivered a swift kick to their tender areas, complete with a cover illustration you've surely heard about.

OK, the average hedge fund underperforms the market. Does referring to "average hedge fund"make any more sense than talking about the "average teenager?"

Anyhow, performance isn't everything, as Josh Brown points out in his rebuttal to Sheelah Kolharkar's Businessweek story. Some high-net-worth investors crave status symbols more than alpha.

The BloombergBusinessweek story is timely because hedge funds are gaining the ability to advertise directly to the public. Theoretically, that public is limited to millionaires. (Hedge funds generally aren't supposed to deal with lesser mortals.) Still, over-aggressive marketing could move hedge funds into the financial mainstream at the cost of their "luxury" cachet.

Suppose Money magazine starts featuring "This Month's Five Hottest Hedge Funds." Might wealthy investors decide they'd rather have a Rolex?