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/)
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Bonds underperform equities but investors still buy them because there is less risk.
Same thing with hedge funds, which in theory “hedge” your bets so there is less risk involved and investors are willing to accept the lower returns for the lower risk.
On a risk adjusted basis, hedge funds do out perform the s and p 500
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