A guy who won't reveal his last name or professional affiliation touts hedge funds!
You're right: one of the greatest selling points of hedge funds is that they can invest in Level 2 and Level 3 assets as well as Level 1 assets, and by so doing they can understate their monthly volatility, which makes them look less volatile than they really are, and which also makes them look as though they have better risk-adjusted returns than they really do.
Another great selling point is that they can report returns as measured by indices such as the HFRI that incorporate impressive reporting biases. But I assumed that was why you said "present investors’ real experience in hedge funds," which is exactly what CEM Benchmarking did. So why is it that when hedge funds ended up being the absolute WORST asset class that actual investors held, suddenly you don't want to look at "investors' real experience in hedge funds"?
If you think CEM Benchmarking's data are wrong, Adam, tell me what's wrong with them. If you think they screwed up their analysis, tell me what they did wrong. But don't hide behind your anonymous screen name smirking about who paid for them to look at their data.
The time period 1998-2011 was the longest one that they have. Net total returns since then according to the HFRI (your choice, even though it's non-investable) have averaged just 3.55%, with an 88% correlation to the Russell 3000 using monthly returns. Over the same period REITs (the FTSE NAREIT All Equity REITs index) have provided gross returns averaging 11.57% (meaning net returns around 11.07% for an actively managed portfolio) with a correlation of just 46% to the Russell 3000.
Peter is still right: hedge funds are still good for nothing.