Bruce Cameron talks about the risks associated with hedge funds in this article.

For me the issues it raises goes beyond just hedge funds. It challenges faith in the entire investment industry itself. And particularly the notion of a statutory pension scheme providing for the nation's retirement.

I can't help thinking what it will do is provide wealth to a handful of individuals long before you and I will ever derive any benefit from it.

For starters, look at the admin costs whittling away at the return.
Any performance is undermined by the excessively high cost structures, which are normally two percent of assets plus 20 percent of returns each year.
As the asset value climbs, you're getting an ever diminishing return. You could even reach the point where your contribution is the same as the admin fee!

It all seems so... inefficient and risky.