Here's the thing though:
Over the course of the late great bull market, mutual funds not only tried to present themselves as the only game in town; they also waged a massive disinformation campaign.
The public has long believed that mutual funds are inherently "safe" whereas hedge funds and futures funds are inherently "risky," in spite of massive evidence to the contrary.
Obviously there are gunslingers and safe players on both sides, but the presentation has always been ridiculously skewed: for the longest time a pathetic mutual fund manager with no understanding of risk control could present himself as a conservative investment, whereas a CTA with a ten year track record of solid returns and modest drawdowns was still seen as a wild west cowboy by the public.
The landscape will change as more information is disseminated. It's only logical to realize that
1) risk is dependent on the manager and the strategy, not the underlying instrument. You can have as much or as little risk as you want simply by adjusting your leverage. As the public understands this, they will be more willing to diversify across asset classes. Commodity index funds are already making significant inroads as people see there is a world beyond equities.
2) It's inherently stupid to take a long only approach and intentionally limit the ability to use hedging strategies or shorting strategies to profit in unfavorable market environments- like fighting with one hand tied behind your back for no reason.
3) The entire public doesn't have to be convinced to create a sea change; just the upper class portion that is savvy enough to understand basic financial principles. The top 20% of boomers probably hold 60% of total liquid assets for the group (not a verified statistic, just a rough guess).
4) Sure you have to have charisma and marketing ability etc., but that's beside the point. The point is that there will be an opportunity for up and coming managers who do have that combination. If you have absolute returns AND you have charisma AND you have marketing ability AND you have the ability to build a network and take a long term view, investing years of time and energy into building contacts and sustaining a track record, then yes I think the opportunities will be pretty incredible, especially given the way opportunity is going global.
And it's always been this way. Unless you've already built a rep through a career in the industry, it takes ten or twenty years to go from being a no-name trader to a real player in the hedge fund world- not a problem if you're starting in your late twenties or early thirties.
I agree with you that the financial world is subject to fashionable trends just like the walkways in milan or paris. But even on that basis, it won't be long before alternative investments and absolute returns become the trend du jour and long only strategies go the way of polyester leisure suits.
