If hedge funds consistently underperform compared to the S&P500 by a WIDE margin, why do they still exist and survive?

Question

Basically the title. Hedge funds underperform every year as compared to broader ETFs like S&P500 by more than 10%! Given this, who invests in hedge funds? Are they stupid or am I stupid?

[https://www.aei.org/carpe-diem/the-sp-500-index-out-performed-hedge-funds-over-the-last-10-years-and-it-wasnt-even-close/](https://www.aei.org/carpe-diem/the-sp-500-index-out-performed-hedge-funds-over-the-last-10-years-and-it-wasnt-even-close/)

In: 128

Answer 1

You’re talking about the average. Some do much better than average, some do much worse. They survive because people will always be willing to take a risk to do better than average.