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Schweser Mock #42

For a neutral equity hedge fund, what is the appropriate benchmark since it obviously isn’t the risk free rate?

benchmark for market neutral, according to schweser is RfR plus a spread for mgmt costs.
they tried to throw you off with the added spread for mgmt costs, but generally a merket neutral strategy benchmark IS risk free rate

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I’m confused. Why would anyone pay mgmt fee’s to someone to achieve the RfR? Is a market neutral fund really shooting for the RfR, or is it trying to achieve a higher return that isn’t tied to the market. (In which case the benchmark would have to the RfR + expected premium + mgmt costs)

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