Solution 1: Diversification - Hedge funds provide the best diversification available with the exception of bonds for any portfolio. The gains from diversification will switch to hedge funds if there is a more inflationary environment.
Solution 2: Safety - A safe asset is not supposed to lose money. After the last month, we can say without hesitation that bonds can still lose money. There should be available other investment alternatives that can provide safety.
Solution 3: Current yield - The alpha generation from hedge funds can provide the potential for creating a stable return. While the consistency of alpha generation has been questioned, in theory, the concept of hedge funds is to produce smoother returns though less market exposure and the generation of alpha independent of market moves.