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Hedge funds try to produce above-average investment returns using tactics ranging from traditional stock-picking to complex derivative and arbitrage plays. High minimum investments, redemption restrictions and aggressive strategies make them suitable mainly for more sophisticated and well-heeled investors.

Successful hedge funds will be entrepreneurial; it is the essence of the craft.

Despite all the media coverage, glitz and glam of hedge funds, they have not done well for their investors. They have high - some say excessively high - fees; their short- and long-term performance has been poor.

Hedge funds are not especially liquid. Many are 'gated' - meaning there are only small windows when you can withdraw your money. They typically have a high minimum investment and often require investors keep their money in the fund for at least one year.

Hedge fund managers charge so much more than mutual fund managers; alpha is even harder to come by. They end up selling a variety of things beyond mere outperformance.

Hedge-fund managers make too much money relative to their social utility. I wish their rewards were a bit closer to those of, say, schoolteachers.

Hedge funds, private equity and venture capital funds have played an important role in providing liquidity to our financial system and improving the efficiency of capital markets. But as their role has grown, so have the risks they pose.

Many hedge fund managers have become billionaires; perhaps this - plus their reputations as the smartest guys in the room - is why they have captured the investing public's imagination.

One of the problems with hedge funds is that they are changing so rapidly. If you have the balance sheet that closed business last night, by 11 A.M. this morning, that won't tell you very much about what they're doing.

It is intellectually dishonest to lump venture investors with hedge fund and buy-out investors.