Shumway Returning Money Shows Perils of Investing in Hedge Fund Managers

``This month, both firms decided to kick out fee-paying investors, rendering the investments Goldman Sachs made through a private-equity fund potentially worthless. The liquidations highlight the risks asset managers, buyout funds and banks face as they seek to buy minority holdings in hedge funds to broaden their offerings for investors or share in the funds’ fee income... “Stakes in hedge funds are generally not good investments,” said Sussman. “They are particularly high-risk given the many moving parts, such as employee turnover, a decline in assets under management and decaying returns.” ''