[edblarney]

Because you want your fund manager to outperform the overall market.

If the economy tanks, and everything is down 10%, and you are only down 5%, that's definitely a 'win' for you.

This is not the 'bad part' about hedge fund, there are other schemish things they do.

[SalvatoreDali]

Considering how hard it is to be 'up' when the entire market is 'down' this doesn't seem so bad. Considering the average hedge fund performances in a down market, it definitely looks like a win to me.