Bloom off the hedge fund rose?

It seemed like just yesterday that the world had declared hedge fund managers the new Masters of the Universe. The title may seem a bit less apt these days. Apart from the Amaranth Advisors implosion, returns are way down at even the brand-name funds--Goldman Sachs' top fund fell 10 percent in August. As for the universe, an index of funds is up 7.23 percent this year vs. the S&P 500's 12.4 percent total return. Of course, there are going to be ups and downs. But the field is really, really crowded right now. And some of the same games that mutual funds perfected may be in play to keep the hedge fund industry's stats looking good. Bad funds are liquidated; their records excised. But for now anyway pensions keep on buying, the thinking being that diversification is the key--which it is.

For more on hedge fund performance:
- Here's a New York Times article