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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2009-2019 was the biggest bull market in history. The S&P 500 returned close to double digits every year. You could not lose money regardless of where you put it. In these years, simply betting the market as a whole is the best way to make money, since you are skipping the big cuts that fund managers take for themselves.
If you run the same numbers starting 2020, things will look a lot different. When there is market volatility, these investors can use advanced techniques and monetary instruments (shorts, commodities, currencies, crypto, futures trading) to try and cut losses or generate gains. That’s when the value of hedge funds becomes apparent.
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