Buffett's main argument against the hedge funds was that their fees are too high and services too poor rather than active investment never works. He started running the Buffett Partnership which was basically a hedge fund and did great for his investors and charged modest fees by modern standards - zero on the first 6% of return and 25% above that. Try finding a modern fund that doesn't charge anything if they only make a 5% return. Your typical 2 and 20 fund would charge 3% out of the 5 splitting the real return after inflation approx 100% to the manager and 0% to the investor.