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COMMON THREADS AMONG THE SUPERSTAR MANAGERS

While the hedge fund industry has moved from a private elite club to a broader and more diverse industry, the crème de la crème of hedge fund managers still have distinguishing characteristics.

These best and brightest managers have a passion for what they do and are not primarily motivated by money. It is more the intellectual and emotional challenge of figuring out the markets and the relationships that exist between various investment classes. Generating superior performance in different market climates is a key objective—not having the most assets under management. As a result, many of these managers' funds are often closed to new investment. Some will take in assets only to replace redemptions or take in strategic investors.

These managers at the time of their interviews, have assets under management of over $1 billion. They tend to be the largest investors in their own funds, have a long track record, have been successful in a variety of economic conditions, and have done as well as or better than the S&P over the long term. Inevitably, the manager has gone through rocky periods but has managed to survive and emerged stronger for it. Lessons are continually being learned. In other words, these managers know they are not smarter than the markets. Managing downside risk is