[manigandham]

Note that report is Vanguard marketing material and most managed funds have specific mandates (like maintaining a certain volatility or investing in certain securities) other than maximizing gains.

This is why hedge funds underperform indexes in bull markets but beat them in turbulent times.

[FabHK]

> This is why hedge funds underperform indexes in bull markets but beat them in turbulent times.

Agreed on the first part; I’d want to see hard statistics (after fees) on the second part (and, no, citing the 3 or so famous exceptions that are closed to outside investors and might have used illegally obtained insider information doesn’t invalidate the larger point).

[manigandham]

Hedge funds trade gains for consistency. They don't publicly report numbers though and aren't meant to be public funds (that's what ETFs are for) so it's hard to get full stats, but it's common knowledge in finance.

[nl]

This is why hedge funds underperform indexes in bull markets but beat them in turbulent times.

Hedge funds have only outperformed the market twice since 2008.

Once was during the financial crisis of 2008 (-19% vs -37%) and once was 2018 (-4.07 vs -4.38).

It's unclear what benefits you are getting here.

[samsonradu]

The market after 2008 has been on a historically low volatility and a record bull run isn't it?

[manigandham]

That aligns with what I said, although there are plenty of private hedge funds that don't report their returns. The benefit varies for each client.

An example would be a real-estate company that has holdings in a fund. Preservation and low volatility is far more important than raw gains and can be used as collateral to offset losses in physical property valuations.