Insider take on hedge funds and separately managed accounts

Think that the "2 and 20" (or is it "20 and 2") fees charged by hedge funds are outrageous. An investment advisor agrees. It's refreshing to hear a professional give an inside scoop on high priced investment vehicles. The column talks about both hedge funds and separately managed accounts:

To be sure, some brilliant hedge-fund managers have delivered fabulous results. But the odds of getting into one of their funds without being extremely well connected on Wall Street are slim. What you're likely to be sold instead is a hedge fund run by a one-time mutual fund manager who decided to reach for the gold ring.

My strong advice: Stay away.

Separately managed accounts are a different animal. In an SMA, you actually own individual securities (stocks and bonds) rather than shares of a mutual fund -- which are, after all, for the riffraff.

But guess what? The people who run your SMA often work for a mutual fund company. In fact, there's a good chance they run a mutual fund that is similar, if not nearly identical, to your SMA.

He goes on to recommend the CGM Focus mutual fund. I've read many great things about this mutual fund. A story this year in Fortune gives some excellent background on Ken Heebner, the fund's manager.