Evaluating hedge funds takes a little perspective: On one hand, the industry is likely to double its returns this year. On the other, that amounts to only one-third the stock market's performance.
The most popular hedging strategy-long-short equity- is on pace for its best year in more than a decade.
But the industry remains a laggard against much simpler strategies, including simply buying the Standard & Poor's 500 (^GSPC) stock market index, and has been unable to shed its negative image.
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Such is life in the business, where defeating that negative perception has become job one.
"People want to focus on what's gone wrong in the industry," said Anthony Scaramucci, managing partner at SkyBridge Capital and one of the industry's most vocal supporters. "We were up 12 and a half percent last year, we're up this year, and we're doing this with a third of the volatility of the S&P."
The numbers present a mixed bag of hedge fund success and shortcomings.
Overall, the industry was up 4.6 percent through April, with assets under management growing to $2.66 trillion, according to eVestment.
Long-short equity leads the strategies, with a 6.7 percent gain-less than half the S&P 500's gaudy 14 percent price gain in 2013. Mortgage strategies have returned about 5 percent, while macro and managed futures have lagged, earning less than 2 percent.
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"Money's coming into the industry for a reason," Scaramucci said. "People think they can get returns and meet their actuarial goals by having some money in the hedge fund industry."
The industry has had a rough time dealing with an investing world controlled by central banks such as the Federal Reserve . Aggressive monetary policy has tamped down the volatility that serves as the lifeblood of hedge funds.
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Scaramucci plays host this week to one of the industry's biggest events-the Skybridge Alternative Investment, or SALT, conference.
More than 1,800 industry professionals gather to network and hear presentations from investing heavyweights such as Dan Loeb, John Paulson, Sam Zell and Nouriel Roubini.
Former heads of state usually are on the panel, with this year featuring former French President Nicolas Sarkozy. Hollywood sometimes has representation as well, with acting legend Al Pacino and director Oliver Stone planning presentations.
Scaramucci said he expects a crowd looking for good times ahead.
"This is a hedge. That's why they call it the hedge fund game," he said. "Most of the people in the industry are very optimistic."
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