Ask 10 people you know what exactly a hedge fund is. There's a good chance not one of them can answer the question accurately. The Washington Post has an interesting look at hedgies today.
Hedge funds are not governed by SEC reporting guidelines and have zero transparency in their affairs. This is justified by the fat that only well-heeled investors with deep pockets are typically allowed to invest in hedge funds.
But a significant source of growth in hedge fund assets has come from pension funds. Thus, millions of average Joes are invested in these secretive, highly risky vehicles, but are blissfully unaware of it.
When Amaranth collapsed earlier this year, one of the losers was the San Diego pension fund. Where is your pension invested?
If hedge funds are to remain unregulated, they should be banned from taking pension funds.