Why do people invest in hedge funds?
I would like to discuss the interest of hedge fund investing with you guys.
I noticed that an overwhelming majority of hedge funds were losers (not able to beat their benchmark), and so wondered why would some investors put them in their portfolios despite the incredibly expensive fees : If fees + low liquidity were accounted for I'm not sure we could count on our fingers how many hedge funds can beat their benchmark.
Some people say hedge funds are a good investment as a hedge for downside risk because of their low volatility and reputation for good performance during bear markets, however can't we just short the index instead?
I'm not trying to taunt hedge fund people, I'm just wondering and figured some of you could give me an answer I would be satisfied with.