The Truth About Hedge Fund Returns

Hedge funds do indeed offer protection on the downside. But it’s how they do when the markets are way up that can hurt investors.

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These seem like good times for hedge funds. Industrywide assets are at or near their all-time high, depending on who’s counting, and the average hedge fund is poised to post its highest net returns since 2009.

And investors seem content. As we recently pointed out, a survey from London-based research firm Preqin found that 84 percent of investors say their 2013 hedge fund returns met or exceeded expectations.

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