Sounds like hedge funds trying to market their smarts. They still haven't beaten the index funds though, so it's more likely BS.
However, the same hedge fund consistently beating the index fund, that's unlikely. But things like ARKK certainly do exist and are funds that can beat the market for a few years, then they tend to regress to the mean.
https://www.reddit.com/r/market_sentiment/comments/p0emqj/do...
ETFs/Hedge funds can have particular features, like equity protection or exposure to a certain market or markets, instead of growth. You wouldn't expect a bond fund to out perform the total market index, that's not it's purpose. It's purpose is to protect your wealth in case of a downturn.
Similarly, some hedgefunds (private equity and arkk are probably two good examples) that seek to find that rare 10X company that they can make millions or billions from, and are okay with generally losing most of their bets.
- Focus on a particular sector, if a biotech-focussed hedge fund is up 4%, SPY is up 7% and biotech stocks in general are up 1%, they have still outperformed. Clients will want exposure to that sector.
- Tail-risk hedging, losing small amounts of money most of the time to make huge amounts during unlikely events.
- Lower volatility, e.g. a fund which underperforms SPY slightly, but hedges against dramatic downturns in the market, so timing is not as important for redemptions.
Sophisticated investors (the only people allowed to invest in hedge funds anyway) generally have more complicated requirements than throwing their money at an index fund and waiting decades to retire on the returns.
"The Renaissance Technologies Medallion Fund has produced some of the greatest returns in the history of the markets. "
I was curious about how much money Renaissance manages: it’s about two orders of magnitude less than Blackrock.
RTC manages $165 billion Blackrock manages nearly $7 trillion