Highly publicized news reports of hedge funds in trouble have not driven investors away from them, nor encouraged them to be more careful. According to a survey of third-party marketers by consultant Carbon360, only about one-third of investors polled were concerned about a hedge fund's infrastructure or risk management systems, while a mere 12% bothered to double check how HF managers earn their money.

"I am a little surprised that investors are not concentrating more on hedge fund's operations infrastructure," survey author Jackie Mandel told Reuters.

The survey also found that, while performance was paramount to investors, only one in five said a key concern for them was preserving capital, and 56% put a lot of weight on a fund manager's reputation. Mandel, once a hedge fund trader at Tiger Management, said that problems arise when top HF managers strike out on their own and are confronted with issues beyond their investment ability. "Some people will go belly up simply because they are out of their area of expertise," said Mandel.

When asked about the future, a majority responded that "the alternative asset class industry has grown at a pace that is unsustainable. As a result, many funds will not be able to survive and there will be a tremendous amount of consolidation within the industry," the report stated.