The Hedge Fund Advantage?

Hedge funds try to make up for their enormous fees by using either esoteric investments or excessive leverage. They use huge amounts of investor capital to achieve this advantage that average investors cannot muster.

They can get into situations such as short selling and derivatives and unusual techniques. They get involved with leveraged buyouts and exotic ventures that vary, for instance, from the film industry to buying life insurance settlement funds.

But then risks are much higher. Too high, in relation to the potential gains. The hedge funds really do not compensate their investors for exorbitant risk, as they do their fund managers for their efforts.