Picking the ‘Right’ Hedge Fund Involves More Than Looking in the Past

Early in my career, I worked at a large brokerage firm. My job included answering calls from people with questions. One question kept coming up: What does your Individual Retirement Account return? The first few times, I thought it was a joke. But it didn’t take long for me to realize that people just didn’t understand the difference between an I.R.A. and the investments held in an I.R.A.

In the minds of these callers, the question made perfect sense. It was only after they heard me explain the difference that they understood they were asking the wrong question.

I rarely get the I.R.A. question anymore, but now investors express similar confusion about hedge funds. They’ll often ask, “Should I be invested in a hedge fund?” The question has become even more common following the announcement last week that California’s influential public pension plan, Calpers, would no longer invest in hedge funds.

Read the rest of the article on The New York Times.