Should hedge funds be sold as alpha generators?

The dramatic growth in hedge fund assets under management, largely driven by institutional investors, has been supported by active marketing to differentiate hedge funds from their long-only cousins.

Traditional managers market their funds by describing them in reference to a benchmark. The beta versus this benchmark defines the level of defensiveness or aggressiveness and outperformance against the benchmark characterises the value added by the manager. In such an MPT paradigm, fund return =