To determine how a fund is performing, you should compare its performance against its own return target over an appropriate period. You should also check it is delivering the return you need to meet your investment goal.
Cash is typically the benchmark against which hedge funds compare their performance, because they aim to deliver a positive return at all times. However, a return equal to, or just above, cash is not a good return for a long-term investor, because it will not compensate you for the risks to which you are exposed.
Other indices used for hedge funds are made up of different hedge funds following different investment strategies and investing in different underlying assets.
Performance data can be obtained from leading data providers.
