Hedge funds aren't just for the super-rich. We also probably have investments in them. Pension funds invest in them, both corporate and public. So do many financial services firms.
So they do serve us too, just a bit indirectly.
They have the opportunity to outperform mutual funds as they dont have some of the restrictions that a mutual fund has - specifically, they can short stocks. Mutual funds can't short stocks. Hedge funds can.
On average, hedge funds *should* outperform mutual funds on that basis alone.
But without audited statements from the hedge funds, it causes a trust issue when looking at performance - you have to know the manager. But you wouldn't trust your retirement to managers you knew nothing about, would you? Really?
I'm fully in favor of hedge funds - in fact, I'd like to see a middle tier available between hedge funds and mutual funds created where you have none of the trading restrictions of a mutual fund and the annoying millionaire status requirement for hedge funds but you also have all of the reporting requirements of a mutual fund so you're not investing in the wild west. That I'd be all over.
But people should realize that hedge funds are not out to enrich the general public - they're out to enrich their investors, as well they should be. A corporate board that has "too many" hedge fund representatives might not be looking out for the general investing public.
Also - what do hedge funds do best? They trade.
What aren't hedge funds known for? Operating companies.
Can they find a person to take the CEO job? Sure.
Can they find a person who'll take a CEO job to grow a company for the long term? No - they're not in it for the long term, they're in it to make their investors money and then look for the next great idea.
Now - find a company that the hedge funds aren't near and maybe there's something to talk about.......
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