Why hedge funds are nothing special

The hedge fund industry is alive and well. But can it live up to the collective marketing hype? Can it consistently deliver above market gains? In the past, the answer has been yes in many cases. But these days, some are growing a bit pessimistic. One critic points to two worrisome trends: 1) They are hiring a lot of analysts from the same sell-side firms, mutual funds and same b-schools that investment banks hire from. They should expect pretty much the same results. 2) They are showing signs of portfolio herding, which make them little better than mutual funds. These are good points. There are many funds that are undifferentiated. The key as an investor is to find those with a proprietary technology or method. They're out there. There will always be winners. You just have to find them.  

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