NEW YORK (Reuters Breakingviews) - Hedge fund investors may have loved their chosen managers’ performance in 2020. Or they may have hated it. Equity-heavy funds did well overall, with their exposure to buoyant stock markets. But the top 20 fund firms made around half the gains in the entire roughly 8,000-strong industry. The net returns of $63.5 billion last year by the top 20 firms of all styles, ranked by their total dollar gains since they were founded, were the highest in a decade according to a new report from LCH Investments, which stacks up big names like Tiger Global, Millennium and Lone Pine Capital. Much of this came from stock-related investing, especially in the technology sector. That’s even after a few big players, like Bridgewater and Paulson & Co, had poor years. The picture can change. Relative up-and-comers sometimes dislodge former all-stars: Renaissance Technologies, where founder Jim Simons told investors late last year he would step down as chairman, fell out of the top 20 lifetime achievers as Chase Coleman’s Tiger Global moved in. Still, it’s notable that many of the biggest are consistently also the best. So the importance of choosing the right fund is clear. While members of the most exclusive club of hedge funds typically manage more assets than other firms, their total is only around a fifth of the industry’s more than $3 trillion of investor money, according to LCH. With thousands of funds to choose from, and wide-ranging strategies, investors can easily make mistakes. That’s clear from a look at another set of data. The HFRI fund-weighted composite index from Hedge Fund Research shows the average fund in its universe making nearly 12% last year. But weighted by assets – essentially considering the average dollar in a fund – the return barely topped 2%. The best-performing cohort was stock-focused, where the typical fund made 17%, according to HFR. That almost matched the 18% captured in 2020 by the S&P 500 Index including dividends, a good result considering hedge funds are also supposed to be limiting downside exposure. But the average dollar in an equity-focused fund returned only half as much. It’s a reminder that for hedge funds to look as if they are worth their hefty fees, investors’ cash needs to be in the right game and in the right player’s hands. That’s a challenging double bet.