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Hedge funds: mediocrity at great expense

Hedge funds have now substantially underperformed simple index funds

DISENCHANTED: Calpers, the giant California retirement system, withdrew from hedge funds last year, and the fact that others haven't yet followed suit is testament to hedge fund marketing and a "holy grail" sales pitch.

ANOTHER year, and another mediocre performance by hedge funds, to put it kindly. The Barclay Hedge Fund Index gained a meagre 2.89 per cent in 2014, while the Standard & Poor's 500 index gained over 13 per cent and the Barclays United States Aggregate Bond Index rose over 5 per cent.