Hedge fund managers promise different strategies: Absolute returns, non-correlated returns, amplified returns – and exclusivity. The goal, many fund managers will say, is not to beat the market, but to provide a hedge, meaning access to uncorrelated assets that mute an investor’s overall positive returns, but cushion the downside. Other funds, led by rockstar managers with recognizable names, take an activist approach or focus on large-scale bets in an attempt to garner outsize returns. Hedge funds are really a compensation scheme, not an asset class; for years, many charged 2 percent of assets and 20 percent of returns.
Source: Hedge Fund Flows Turn Negative