Ho-hum hedge returns no problem for some investors

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What lesson can you learn from Hedge Funds?

Hedge funds have gotten a lot of bad publicity over the past few years for underperforming broad market gauges, but most institutional investors couldn't care less.

In fact, they prefer funds that focus less on eye-popping returns and more on generating steady, achievable growth levels and portfolio diversification, according to a survey released this week by Preqin, an information provider for the alternative investment industry.

That's important at a time when the stock market index is coming off a year in which it posted gains in excess of 30 percent, while hedge funds as a whole rose a comparatively modest 8.9 percent net of fees.

"It doesn't surprise me," Anthony Scaramucci, founder and co-managing partner of SkyBridge Capital, said of the survey results. "In the search to make actuarial goals, institutional investors and high net-worth investors are looking for high single-digit, low double-digit returns that can be generated with less volatility than the overall market and certainly less volatility than the S&P 500."

The survey numbers at least on their face are fairly startling.