Hedge funds are attracting a glut of new money because hedge fund indexes hugely overestimate the industry's performance, a leading U.S. academic said, according to Reuters.

Burton Malkiel, famed economics professor at Princeton University and author of A Random Walk Down Wall Street, said that while hedge fund assets have swelled to about $1 trillion between 1998 and 2004, investors should be wary of how fund performance is measured.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.