Agree and disagree. Hedge funds are not supposed to “beat the market”. They’re supposed to deliver some beta (maybe) and some alpha (definitely). Outperform in bear markets and underperform in bulk markets. Unfortunately the average hedge fund does not even clear that low bar.
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its also not informative imo to look at hedge fund returns as an aggregate index… of course they underperform after fees in aggregate, active management is a zero sum game everyone can’t generate alpha together, some win and some lose
“Active” doesn’t just include hedge funds though — in theory HFs could be winning in aggregate if active mutual, pensions, ETFs, retail etc are all losing. Although of course in practice all these groups are failing to beat the market so 
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Active has to outperform passive under two conditions: 1. Active has higher fees (basically always true) 2. Passive does not need to trade (not true, but can be approximately true in some sectors)
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