It pays to pick the right hedge fund

A new study of hedge fund dispersion by Morningstar shows that there is a big difference in the returns across managers by category.  See ThinkAdvisor.com This dispersion is for the last 12 months ending in March. This is dispersion is even greater over a five year period. It is amazing that you can get that large of difference, but it also tells you something about the differences in style within a category. For bonds and large cap stocks, there is a diff differences between the best and the worst, but for global macro and systematic futures, it pays to make good picks and to diversify across a few managers to reduce the change of being in the extremes.