THESE HAVEN'T BEEN the best of times for hedge-fund managers. In the past few years, the industry has been hit by embarrassing scandals, fund failures and, in many cases, disappointing returns. But people are still buying. They don't know what else to do.

So here's my best move for the inaugural column of My Best Move: It's time to unload hedge funds. Or at least most of them.

Hedge-fund managers thrive by selling two products to wealthy investors: hope and exclusivity. The hope is that these magical shamans, with their talk of 'alpha' and 'beta' and 'omega' (which may refer to the watch they intend to buy with your fees) and their battery of mathematics geniuses, have discovered financial alchemy that will make you rich beyond compare. The exclusivity comes from knowing you've got an in to a fund that other, lesser mortals haven't.

The pitch seemingly is working better and better. Hedge-fund assets recently hit a new record of $2.2 trillion, surpassing the levels seen before the crash, according to Hedge Fund Research in Chicago. To put that in context, 15 years ago the total amount invested in hedge funds was estimated to be less than $300 billion. The industry is booming.

But investors need to do some basic math. We don't know exactly what the gross returns will be over the next 10 years from the universe of financial assets. But let's assume, for the sake of argument, that they match history. According to New York University's Stern School of Business, the average return over the past 80 years from a benchmark portfolio of 60 percent stocks and 40 percent bonds has been about 8 percent a year. Most hedge-fund managers charge around 2 percent annually to manage the money, plus 20 percent of any profits. So just to match that 8 percent, net of fees, they would have to earn nearly 12 percent a year before fees. In other words, they'd have to beat the market by 50 percent a year, every year, just to match a low-cost portfolio of stocks and bonds.

It's a mystery how many re- ally outperform. The standard indices that track the performance of the hedge-fund industry contain a flaw: They only report the figures of the funds that choose to hand in their results. Those that blow up or are too embarrassed don't. So the indexes won't count Amaranth Advisors (which died in 2006), Sowood Capital (2007) or even Bernard Madoff (2008). Yet the indices still look disappointing. The Hedge Fund Research Weighted Composite index has underperformed the benchmark portfolio over the past three and 10 years. Industry veterans say there is some reason to believe performance was better in the early days