The overall investment experience for hedge fund investors has been so abysmal that most industry professionals are sensibly keeping their heads down. There are great hedge funds to be sure, and happy clients, but the data shows indisputably that these are not the norm. Hedge fund managers themselves of course aren’t responsible for the industry, only their own fund. So they have no reason to comment or even care about my book – and quite right too, because it’s not directed at them anyway, but at their clients. Hedge fund managers don’t need my help.

However, Mr. Andrew Baker is CEO of the Alternative Investment Management Association (AIMA), whose website says it is the,”global representative of the hedge fund industry”. It’s Mr. Baker’s job to promote hedge funds as a good investment, and he embraces the mantle, as he showed in a letter last August to the Financial Times in which he chastised writer Jonathan Davis for promoting “hoary old myths” about hedge funds. Mr. Baker goes on to note that, “Far from being disappointing, hedge fund performance has been impressive. During 1999-2010, the major hedge fund indices achieved overall returns (net of fees) of more than 8 per cent per annum.” As Mr. Baker may not have known then, but may learn if he reads my book, the good years for investors were when the industry was small.  8% per annum may sound good, but it’s far higher than what the average investor earned. The Absolute Return business has failed to deliver investors an Absolute Return but has instead retained at least 84% of the trading profits earned on client capital during this time; their money would have been better off in treasury bills. I wish Mr. Baker’s letter had been published in time to make it into my book.

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