[makomk]

The trouble is, assuming that returns are essentially random and that hedge fund managers cannot beat the market except through luck - which seems to be more or less true - it doesn't matter how much you incentivise them. Giving them a bigger cut of the profits just means you come out worse on average. Now, it's certainly in the interest of hedge fund managers to convince investors that giving the managers a bigger cut is in the investors' interest, but that doesn't make it true.

[Tycho]

But if you truly believed that returns are random then you definitely wouldn't be investing in a hedge fund anyway, so I'd say that's a moot point.