The AQR chief sure knows how to sell his industry, and is now continuing his somewhat less-than-full-throated “Hedge Funds: They’re Alright, I Guess” campaign on his own website. To sum up his masterpiece, “Hedge Funds: The (Somewhat Tepid) Defense”: Most hedge funds are crap and you should probably just invest in an index fund. But if you can find yourself a non-crap hedge fund manager—one C. Asness comes to mind—you’re probably better off with him or her. Either way, the most common criticisms of the industry are pretty off-base, and as such, can be added to the Asness Menagerie of Peeves.

Not surprisingly, that the CalPERS move has indeed inspired many others to also write on hedge funds. Unfortunately, a great deal of them suffer from the flaw I mention above. They focus on performance, sometimes very short-term performance, often, if not usually, confused by the beta issue….

Hedge funds are not meant to keep up with the S&P 500 one-for-one, certainly not when it soars. Of course some stars will keep up, either by luck or skill, but as a broad category it’s never been the case at such a time.

Hedge Funds: The (Somewhat Tepid) Defense [AQR]