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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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)
