Several theories of reputation suggest that managers’ career concerns affect their decisions. We investigate these theories by studying the behavior of hedge fund managers over their careers. In contrast with mutual fund managers who incur more risk over time, hedge fund managers take on less risk over time. This finding is consistent with certain industry characteristics which imply that experienced managers have “more to lose” in personal wealth, current income, and reputation should their funds fail. Most important, the propensity of experienced managers to reduce risk explains their underperformance. These results have implications for fund selection and incentive contract design.