The hedge-fund industry manages nearly $1 trillion -- a scary-sounding number, to be sure -- that's chump change compared to the $12.74 trillion managed by mutual funds (excluding money market funds), according to the latest ICI data.

Over the last five years, the world's hedge-fund population has boomed more than 33%, according to Van Hedge Fund estimates, There are more than 3,300 such funds now, compared with 1,900 in 1999, according to Hedge Fund Research of Chicago.

Chicago Board Options Exchange's measure of market volatility (the old one, with ticker symbol VXO) fell to its lowest level in a decade this March.Greenspan and other economists have credited hedge funds with smoothing out broader market volatility.

According to a recent report by Morgan Stanley, funds of hedge funds -- which invest in groups of hedge funds -- account for 45% of all investments in the hedge-fund universe.

The hedge-fund industry is far from the saturation point, says Robert Schulman, CEO of hedge-fund advisory Tremont Capital Management. Why Successful hedge funds have a limited number of investors, unlike mutual funds, so they fill up quickly. Secondly, while some well-established funds become mainstream institutions, most of them drop investors over time and run their own money, Mr. Schulman said.

The pool of potential hedge-fund customers just isn't likely to get sopped up very quickly. In fact, demand for hedge funds remains so strong that the reported fees are increasing, says Stephen Brown, professor of finance at New York University's Stern School of Business. Competition exists but hedge funds aren't anywhere near where mutual funds are -- knocking fees lower in a bitter fight to grab clients.