The luster of investing with ever-exclusive hedge funds may not be warranted.

Data compiled from Morgan Housel suggests that over the long run, these vehicles significantly underperform passive indexes. While the hedge fund universe has no shortage of known rockstars like David Einhorn, there are many more subpar managers who benefit from the outperformance of a few while actually trailing passive indexes by a wide margin.

There are many reasons this happens, but perhaps the most significant is the drag from fees, which is why we advocate taking the reins of your own investing future and buying and holding great companies for the long run.