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The HFRX Directional has offered slightly lower returns than the S&P 500 over the same time.  Additionally, the st dev of its returns has been higher.  The benefit it appears to offer is that its VAR and ES is lower- likely because it is hedged where as the stock index is not

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HFRI MACRO (total) had the highest overall return with moderate standard deviation and a very good Sharpe ratio of 1.06.

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HFRI is not that good when the stock market can have a Sharpe ratio 0.4.

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HFRI Diversified reduces correlation to the market while also delivering a moderate alpha. The average return of both our funds is below market expectation. The vanguard stock fund offers a better sharpe ratio, but the bond market worse.

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The HFRI Macro index has the best performance among all indexes. The HFRI Macro outperformed the market over the period and its best of bad returns were mostly better than other indexes as its VaR is -2.00%.

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The Directional HFRX performs below the market but seems to have more negative tail protection.  The sharpe ratios are the same.

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HFRI Event Driven Total:
Over the given period, the Event Driven Fund returns more than the market and offers a  lower standard deviation than the  market. The Event Driven Fund, however, has more negative skewness than the market, and, therefore, has a larger chance of having a large negative return. The fund also has a higher sharpe ratio than the overall market.

Vanguard Total Bond:
Over the given period, Vanguard total bond fund offers less value than the market. However, the bond fund also offers loss volitility and the smaller negative skew than the market. The sharpe ratio was also better for the bond fund than the market.

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HFRI Evevent Driven Total:

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HFRI Evevent Driven Total:
Over the given period,

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HF

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HFRI Evevent Driven Total

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The HFRI EQUITY HEDGE: MULTI-STRATEGY is underperformed the stock and bond indexes. Our SD was higher than the bond market but lower than the stock market which is expected. This could explain the lower return compared to the bond market. For the stock market we have the same skew, but a smaller kurtosis and I think this could effect our return.

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Both the credit arbitrage and market defensive are underperforming the market. However, their market seems to be more volatile because the standard deviation is higher. The change in volatility could be of great interest to an investor.

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The HFRI Equity Hedge Short Bias fund is negatively correlated with the stock market index, as would be expected. Over the given period, the Short Bias fund greatly underperforms the stock market, resulting in negative holding period returns.

The Short Bias fund was also more than twice as volatile as the stock market index, and has positive skewness. The fund has a larger negative tail than the stock market, as shown by expected shortfall and skewness.

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The HFRI FUND OF FUNDS: CONSERVATIVE produces a distribution of returns that is tighter than that of the stock index fund. This fund's returns were on average lower than the index but since it had less variance in returns the worst possibilities for the fund were more mild than those of the index. This means this would be a good option for someone with a shorter investment horizon (assuming it is still longer than the initial blocking of withdraws from the fund) or for someone who is more risk adverse for another reason because it provides returns greater than the risk free rate while being fairly less volatile than the index. Additionally, it provides investors with a way to make a portfolio with less correlation with the market than an index so it provides a way to hedge against some market moves without having to use derivatives.

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Both the fund of funds strategic and equity hedge fundamental growth underperformed the overall stock market during the time period. Growth is more risky than strategic as shown by our SD, beta, and VaR(5%).

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The Equity Market Neutral and Fundamental Value hedge funds returned less than the market over the given time periods. The hedge funds did, however, offer lower standard deviations, value at risk and expected shortfalls than the S&P 500. This decreased volatility would explain the appeal of these hedge funds.

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HFRX Quantitative Directional
Our fund underperformed the others, with lower variance than the market (Vanguard 500).

Like the other funds,  there is no correlation to the bond market.

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Most hedge funds generate average positive betas, and on average Sharpe ratios exceed the S&P 500 index. These attributes could be attractive when compared to passively managed stock/bond funds. However since the recession, hedge funds that consistently generate alpha are more rare.

However, holders of stock and bold holders should be wary of survivorship bias. Hedge funds could choose omit data from periods of underperformance. Accounting data that is released is almost all unregulated and unaudited. Actual hedge fund performance may differ due to this bias.

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The HFRI FUND OF FUNDS: DIVERSIFIED is moderately correlated to the stock index and has very little correlation to the bond index over the same period. Diversification helps in reducing the volatility that the stock market goes through (correlation is 0.52)
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The Equity Market Neutral and Fundamental Value funds returned less than the market over the same period.

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The EFRI Short Bias Hedge Fund returned $0.70 cumulative value of a dollar invested versus $9.30 on the Vanguard 500 index and $2.17 on the bond index.  The Hedge fund performed much worse than stocks and could not even match the return of a risk free bond.