Must-Read: Barry Ritholtz: Hedge Funds Scramble to Reassure Investors: “Why is it that in the face of underperformance…

…investors still seem to love hedge funds?… This rather astonishing figure:

The 20 most profitable hedge funds for investors earned $15 billion last year while the rest of the industry collectively lost $99 billion. Those top managers have made 48 percent of the $835 billion in profits that the hedge fund industry has generated since its inception….

I suspect that… a large part of the reason for [the] inflows[is] an ill-advised pursuit of market-beating alpha by investors who seem to be desperate to find the next James Simons…. There are no signs of it slowing down. That isn’t to say a rotation within the hedge fund firmament is not taking place… the disappointed limited partners in hedge funds also seem to be a fickle group. Like speed daters looking for Mr. or Ms. Right, they table hop in pursuit of the one manager who has the secret sauce to make the wealthy accredited investor even wealthier.