As a "poor" person by Madoff investor standards, I am paranoid of any investment where I don't know what it is invested in. That said the other side are people who invested with the guy who bet against the CDS crap in 2008 (sorry forget his name), who I think were also in the "trust a guy with my money" camp. So I can see why people do it. But I would diversify, maybe max 10% in any one fund that is a black box, maybe max 40% in black boxes in total. Assuming you are rich - maybe 10% for most of us.