No, 2.4% is just a relative return. In your example, the absolute return is -17.6% so the hedge fund managers won't gain anything beyond the 2% or so administra

No, 2.4% is just a relative return. In your example, the absolute return is -17.6% so the hedge fund managers won't gain anything beyond the 2% or so administration fee. This is not a success for them or for their clients (and that is the point of HN post title!). Arguably the defining feature of hedge funds is the expectation (or claim) of positive returns independently of market conditions. In other words, they usually do target absolute returns. Otherwise there would be little basis for charging 2% of assets plus 20% of profits. By the way, the zero sum game thing or, equivalently, average return of 0%, only makes sense if: a) compared to the average market return AND b) you consider all the "players", not only hedge funds.