That’s not to say that there aren’t individually successful hedge fund managers, just that in general hedge funds are a crappy investment whose titanic management fees are in no way justified by their performance. Felix Salmon has the goods:

At the beginning of January, Simon Lack published The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True. It basically does for hedge funds what the Kauffman Foundation did for private equity, and shows that while fund managers can do extremely well for themselves, fund investors would be better off avoiding the asset class entirely…

Baker and the AIMA have in fact now published a 24-page paper entitled “Methodological, mathematical and factual errors in ‘The Hedge Fund Mirage’”, seeking to debunk the book. But a close reading of the paper reveals that there’s much less there than meets the eye.

In fact, the AIMA paper has convinced me of the deep truth of Lack’s book in a way that the book itself never could. Reading a book, it’s often very hard to judge just how reliable the author is, or how cherry-picked the data might be. But if a high-profile hedge-fund industry association spends months putting forward a point-by-point rebuttal, and that rebuttal is utterly underwhelming, then at that point you have to believe that the book has pretty much got things right.

Matt Yglesias concurs. All this is to show that the susceptibility of investors to fads, fashions, and herd behavior, and the allure of those pulling down unthinkable wealth (even if they are, like hedge fund managers, largely parasites), goes all the way to the very top, to those institutional investors moving around tens of billions. As Yglesias says: “There’s no special sauce here that’s going to let you beat the market, there’s just the opportunity to pay higher management fees.”

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Follow Ryan on Twitter @ryanlcooper. Ryan Cooper is a national correspondent at The Week. His work has appeared in The Washington Post, The New Republic, and The Nation.