In a recent Bloomberg article, AQR’s Cliff Asness argues that the opinion pendulum on hedge funds has swung too far, that “all you read about today is that hedge funds are a failure and investors are fleeing.”

This overreaction, he explains, comes in part from; (1) a failure to understand how to measure hedge-fund returns, and the fact that (2) the last few years have been a “mild disappointment and they have given critics enough ammo to build an exaggerated case.”

Asness highlights his long-standing belief that hedge-fund returns have been too correlated with overall stock market returns and, therefore, that the high fees charged were not justified. Further, he writes, a fair amount of returns came from “relatively straightforward exposure to known strategies such as trend-following, the carry trade in many forms, and broad-based arbitraging of situations like mergers and convertible-bond offerings” which, Asness asserts, are useful but don’t justify a “2 and 20 price tag.”

That said, he also takes issue with the broad criticism stemming from their trailing the S&P 500 since 2009, arguing that they are designed to lag in such market conditions. “The average hedge fund has always been, and still tends to be, ‘net-long’, betting that the stock market rises over time.” He points out, however, that hedge funds hold up better during market crashes. “There is an old saying: ‘Don’t mistake a bull market for brains.’ There should be a corollary applicable to hedged investments, even if only partially hedged: ‘Don’t mistake a bull market for buffoonery.'”