Usually because the strategies which have genuine alpha and consistently outperform are capacity constrained, and so cannot be scaled to handle both.
Of course, at RenTech in particular the employee-only fund is the good fund. But that's not always the case, so the parent commenter has a point. Deferred/locked up compensation can really suck.
>Of course, at RenTech in particular the employee-only fund is the good fund
Yeah, but only the long tenured/high performing employees get access to the good fund (there's a merely average fund that most employee deferred comp goes into, if I understand correctly).
Former colleague of mine was a M&A trader at Lehman during the crash. 95% of his net worth was in his fund, which was up 50%+ for the year when the bankruptcy trustee seized everything. IIRC, he was starting to get his money back in ~2014-15.
Of course, at RenTech in particular the employee-only fund is the good fund. But that's not always the case, so the parent commenter has a point. Deferred/locked up compensation can really suck.