I suppose I can understand why an investor might want to put money into a black-swan fund as a way to hedge fat-tail risk. But I don’t see how the economics are supposed to work for the fund’s manager. By definition, he’ll only get a performance fee in the event of a 100-year flood or its functional equivalent. That’s an awful lot of waiting, all while watching fund assets-and your management fee-leak away. I must be missing something. . . . P.S. Actually, benefit to fund investor not so clear, either. If disaster does strike and the fund generates big returns, the fees are going to be huge. Why not just buy deeply out-of-the-money puts on the S&P 500 whenever the VIX is snoozing? That’s basically what Nassim Taleb did, and he’s the one who kicked the b-s craze off. . . .