You have an axe to grind with anyone who disagrees with you. I don't understand that. Here's what I understand: Hedge funds aren't better because they are hedge funds. The best ones are better because the persons who pull the trade triggers for them possess and exhibit skills similar to those of talented individual traders. It's much more than leverage, models, and hyper-powerful black boxes. Why, for instance, haven't hfs prospered as a class in the last 12 months, when there has been huge and exploitable price action in extremely deep markets? If they are generally superior, they should have excelled lately, not disappointed. I believe I know why, so I agree with zdreg (who, I'll add, didn't oversell his points and took the trouble to back them with explanation).
"the niche space is still creating phenomenal returns, in fact ,some are downright shocking." exactly. without an edge you cannot outperform the market. over time the edge will be withered away by market forces and returns will equal the returns in that sector as that previous edge withers away to under performance. obviously it depends on your time horizon. how long an edge lasts is just a guess.