Hedge funds had their best year in 2009, but they were no match for exchange traded funds (ETFs). The news should be comforting to retail investors who are worried they’re missing out on big gains just because they don’t have the millions they need to get into a hedge fund.

Hedge funds had their best year in 2009, but ETFs that track the broad market came out ahead of these million-dollar investments. In fact, retail investors may want to consider themselves lucky, says Dan Burrows of Daily Finance.

The Hennessee Hedge Fund Index gained 24.6% last year, compared to the S&P 500, which returned 26.5% in 2009. Furthermore, consider that the SPDR S&P 500 (NYSEArca: SPY) has an expense ratio of 0.09%, while hedge funds typically charge 2% of net asset value (NAV) and a whopping 20% of profits. You can also sell your ETF at anytime and you always know what you own. What’s better than that?

Bear in mind that hedge fund managers charge enormous fees because they’re supposed to serve up excess return. So even though hedge funds had their best year yet, the case for ETFs just got stronger. Performance is comparable and the expense ratios take the cake.

For more stories about ETFs, visit our ETF 101 category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.