But for those who can tolerate risk, he suggests investing 5 percent to 10 percent of a long-term portfolio in such funds.

"Indeed, you did not want to tolerate risk.

They love the glamour of investing in hedge funds, but, at the same time, they can't tolerate risk.

Investors who have long investment horizons and can tolerate risk might be better off in funds that beat the market less frequently, but beat it with bigger margins when they do, Ms. Arnott suggested.

"But that really depends on your ability to tolerate risk."

But, since 9/11, the willingness to tolerate risk had changed.

Some serial entrepreneurs tolerate risk; others revel in it.

They can obviously tolerate risk.

The asset allocation that works best for you at any given point in your life will depend largely on your time horizon and your ability to tolerate risk.