take it like a man i say to hedge funds, page-3

Its just a crazy situation for super funds to make a small 2% on thier holdings, and risk undermining the rest of thier portfolio. Think about it, the hedge funds short it and pay a 2% fee, the shares drop 20%. They then close out thier short position, getting a average gain of 15%. The share price is now worth 15% less and are returned to the super funds. They get to hold shares that have gone down in value. %15 loss + 2% hair cut = 13% loss in total.
Why is this done? Because your fund manager knows that he is judged to outperforming the market index. The 2% he gets is a real cash gain, that he can put in at the end of the year bonus schemes. Now for the kicker; because his portfolio has gone down 15% with the market index, the cash he has made makes him out to be outperforming the general market.