The fact that supposedly "sophisticated investors" didn't figure this out years ago amazes me. Hedge funds, as a class, don't perform that well.
The main difference between hedge funds and regular mutual funds is that regular funds have to report their numbers in a standardized way. The SEC requires mutual funds to report 1, 5, and 10 year performance, after all fees. Hedge funds don't have to do that. That lets them boast about their performance in good years, and shut up in bad years. This fools a surprising number of investors.
Under US law, hedge funds are for "sophisticated investors". Unfortunately, pension funds qualify.
This is why I tell young people that math matters to them. Not understanding math correlates with managing ones' investments poorly.
It's also sad that nothing in high school teaches students a thing about what a balance sheet or a P&L statement is, or what debits and credits are. They don't teach anything about how business and the marketplace works - things that are very important to managing their adult lives.
As to the boasting about performance, hedge funds are not allowed to disclose their performance to the general public
Additionally, while some hedge funds might not be very different from a mutual fund, there are huge differences in what you can do in a regulated vs unregulated vehicle
The main difference between hedge funds and regular mutual funds is that regular funds have to report their numbers in a standardized way. The SEC requires mutual funds to report 1, 5, and 10 year performance, after all fees. Hedge funds don't have to do that. That lets them boast about their performance in good years, and shut up in bad years. This fools a surprising number of investors.
Under US law, hedge funds are for "sophisticated investors". Unfortunately, pension funds qualify.