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Bailey McCann, Opalesque New York:

Simon Lack is a veteran of the hedge fund industry. After 23 years at JP Morgan, Lack went on to found SL Capital Advisors a firm which provides separately managed accounts to investors with an interested in master limited partnerships; high dividend yielding stocks - hedged and unhedged, and a deep value equity strategy. Lack, also recently authored a book - The Hedge Fund Mirage, which he spoke about with Matthias Knab for Opalesque TV.

In the book, Lack writes that while there are many happy hedge fund investors, "on average, a dollar invested in hedge funds would have been better off invested in treasury bills." He explains that has hedge funds attract more assets, like they did throughout the 1990s, returns actually become worse.

"I think that what is important is for investors to look at hedge fund returns based on an asset weighted, or an internal rate of return basis because science is a real factor for the hedge fund industry. It is a fact of the individual managers, small hedge funds do better than big ones. Big hedge funds generally did better when they were small. The same is true for the hedge fund industry," Lack says. "There is a very clear negative correlation between asset size and performance."

He notes that while on the whole, hedge funds are still very good investments, the bulk of returns go back to managers ......................

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