Hedge Fund Performance: do not compare Apples with Oranges

Comparing Hedge Fund performance with the S&P Index is comparing apples with oranges (Goldman Sachs Report). One may have a critical view of Hedge Funds – and they are far from perfect – but they are expected to provide satisfactory returns on a risk-adjusted basis and diversification away from mainstream investments such as large-cap equities that dominate the major stock indices. A less simplistic analysis is needed and in addition those looking to invest in hedge funds need to fully  understand the instrument rather than being taken in by a sales pitch.