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By Jonathan Spring: Unless you have at least $10 million to invest and you have plenty of time to devote to watching your managers and you have extraordinary discipline and you have a high tolerance for loss or you have more than average luck, you probably have no business investing directly in single-manager funds. How can I be so sure about you? Let’s start with me.

I realize now that the only reason I survived my early years as a hedge fund investor is because I was lucky enough (if you’re going to have good luck in this business, it’s nice to have it later, but it’s necessary to have it sooner) to place money with a few managers whose performance kept me afloat until I learned that I shouldn’t really be invested with some of them, no matter how good their performance was.

What I eventually learned was that a lot of good performance has nothing to do with a manager’s skill, and that, when the tide turns, his or her lack of skill exposes the risks you have been taking all along. I’m not talking about simple market risk here—the unpredictability of economies and its manifestation in financial instrument prices are part and parcel of investing. The more important and less apparent risks are all “human”—a manager’s inability or unwillingness to confront the “tail” risks associated with his or her strategy, to maintain personal discipline or to run a business.

As a result, individual hedge funds have a greater attrition rate than many investables, about the same as......................

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