[hiAndrewQuinn]

I do, and that's actually incorrect in a strict sense, but it's correct-enough for the average person to follow to Vanguard et al and have a generous nest egg without a lot of risk attached.

Your intuition however is correct in the sense that there is a principal-agent problem at play with all kinds of hedge funds, where if the hedge fund manager isn't the one investing his own money he is by default incentivized to do things besides just maximizing hedge fund profits. But there are indeed managers who have such an ability to generate edge that they do in fact invest their own money solely, usually money they generated while working for other hedge fund managers before striking out on their own, and these people are terrifying forces to watch in action indeed.