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Wonder where the money's going? Hedge funds. These privately managed, loosely regulated investment pools pulled in $24 billion last quarter. TIP SHEET's Linda Stern asked Rapoport for some perspective:

Why are hedge funds so popular?

The stock-market decline in 2000. Hedge funds are attractive because they can provide a return that has little or no correlation to the stock market.

What's new?

Hedge funds used to lock up investors' money for two years or more. Now there's monthly liquidity, and a lot more transparency. Funds have engineered their styles to cater toward institutions. Their goal is not to make 30 percent a year, but 1 percent per month, with little volatility.

Should everyone go buy a hedge fund?

Not everyone can. The SEC requires investors in hedge funds to have a net worth over $1 million and have earned over $200,000 individually for the last two years, or $300,000 for the last two years if you file jointly.

Why are their managers treated like celebrities?

Because of the power and respect they hold, and the money they make. They can move stock prices and influence corporate management. Hedge-fund manager Edward Lampert engineered the Sears Kmart merger and earned $1 billion last year.

How high are fees for investors?

The average is probably around 1.5 percent of assets a year plus 20 percent of profits. Some charge much more.

What do you worry about?

In February 2006, the SEC will start requiring hedge-fund managers to register as investment advisers. That will provide investors with increased transparency, but I'm curious to see how many funds will change their structure to circumvent those rules.

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