Dodge & Cox's Gunn blasts hedge funds

Hedge fund investors are likely to get burned, said John Gunn, chief executive of San Francisco-based Dodge & Cox. Investors in hedge funds should expect a “modest to major disappointment,” he said. Mr. Gunn, in a rare public appearance, made his comments during an address yesterday at the Tiburon Strategic Advisors CEO Summit in San Francisco. Many hedge fund managers, after having “taken people over a cliff” after the market turned down in 2000, “now say if you pay me more, I'll perform better,” Mr. Gunn said. “That's a heckuva deal.” He chided hedge funds' fee structures as being a “rearrangement of wealth among rich people.” When asked how Dodge & Cox markets its popular funds, Mr. Gunn said the firm really has no marketing strategy. He said the high cash inflows into the fund group were due to the relatively high returns its value-oriented funds produced after the 2000 market drop.