By definition - if they were parasitic, they would have to exploit the market or other traders without adding any value. I don't see hedge funds doing that. There are traders which are parasitic. Front-running orders would be one example as no value is added.
how does a hedge fund differ from a mutual fund on a fundamental level? I've seen returns on some of my sector mutual funds that blow the S&P out of the water some years (semiconductors, telecom, defense, biotech).
Idk the correct definitions but creating and channeling value is different. Parasites also direct movement of resource and prefer choosing good host. What value is being created by investing? If tapeworm attaches to digestive system does it create value?
If you take the average returns of all the retail traders and compare to the average returns of all the hedge funds, I bet you they look about the same. Therefore, hedge funds and retails are both liquidity providers. We are not parasites.
I think it's fair to be harsh on hedge fund managers but collectively calling them parasites is a bit much, just IMHO. You have a choice to invest with a hedge fund or not. Of course, most people doing their research on historical data will arrive at the conclusion most hedge funds deliver no value, but saying that the next decade will be similar to the last two is a leap of faith.