New York (HedgeCo.NET) The annual SALT Conference is taking place this week in Las Vegas and among the more prominent topics is whether hedge fund fees are too high. The conference hosted by SkyBridge Capital is considered to be one of the most important events in the hedge fund industry.

With many of the biggest names in the industry in attendance, the subject of fees was bound to come up and with the industry as a whole lagging the broader market in recent years, the industry is under greater scrutiny. With high profile clients such as the California Public Employees’ Retirement System (CalPERS) abandoning their hedge fund investments, the public as a whole feels the need to question the fee structure as well.

HedgeCoVest was designed to address and resolve many of these concerns. At HedgeCo.net and HedgeCoVest, we have expressed it many times, but it is worth repeating. When the market goes through an extremely bullish move like the one we have been in the last six years, hedged portfolios as a whole are almost certain to lag the overall market. If you compare the performance of the Credit Suisse Hedge Fund Index with that of the S&P 500, you can see that the hedge fund index lagged the overall market during the bull market at the end of the 90s, just like it is doing now.

At this point in time, the best thing for the hedge fund industry might be for the market to go through another bearish period like the two previous bear markets that occurred earlier this century. That would likely squelch the criticism of hedge funds and their strategies.