Barry Ritholtz writes:  Hedge funds have done well in 2014, but not along a normal Gaussain distribution along smooth bell curves. It has been feast or famine.  Darwin’s laws of the jungle apply to capital as well: The big get bigger, while the weak atrophy and eventually die out. The elite firms dominate money raising.

Why are investors attraced to hedge funds in the first place?  The lottery-like nature of the next high alpha?  Selecting the emerging managers of the next 10 years has proven to be impossible.

CALPERs of course dropped hedge funds.  Yale has done very well under David Swensen.  Yale was in first, the alpha generation high, the costs reasonable and valuations modest.

Ritholtz sees more feast or famine. A handful of firms will capture most of the alpha and fresh assets. More firms will shut their doors. Perhaps a few more endowments and pension funds will re-evaluate their hedge-fund investments. Don’t be surprised if venture-capital and private-equity fund are next to undergo a similar examination.