High Returns Prove Elusive for Hedge Funds

A composite index of more than 2,000 hedge funds returned 72% over the past decade while charging substantial fees—the 25 highest-paid hedge-fund managers made $21 billion last year, according to the Wall Street Journal. Meanwhile, for comparison, an index fund composed of 60% stocks and 40% bonds had a return of about 100% over the same period while charging low fees. With pension funds increasingly turning to these firms for higher yields, hedge funds, which bet on and against stocks and invest in equity derivatives, now manage more than $2.4 trillion, up from $865 billion a decade ago.