* stays away from stuff everyone else is talking about --> the big hits only come from things that everyone eventually 'talks about'. So you must be aware of this dynamic. You don't want to ignore the herd - you want to be just ahead of it. Ergo - you have to understand herd dynamics.
* stays away from hedging - 'hedging' is still used often, and it's an important part of risk mitigation and execution strategy. Anyone that ignores herding is ignoring an essential tool that they can use
* stays away from diversification - same as previous: financial diversification is another essential tool.
* arbitrary limitations - no investor makes 'arbitrary' decisions. They stay away from certain sectors for a reason: they don't understand it, it's risky, there are geopolitical issues they can't control etc.
* tries to keep costs down - uh ... keeping costs down is what every company should aspire to do. In fact - if a fund can get rid of 1/2 it's staff through automation, well, you could make more money depending on how the fees are structured
* doesn't worry about volatility - no - you definitely want them to worry about volatility as it's an essential financial characteristic of the market and means a lot. If your strategy is to invest in cheap blue-chips that pay nice dividends because other investors are not paying attention ... well, volatility is bad.
Here's the key: Investing is not really investing. It's mostly gambling - in the sense that it's a zero-sum game, played against other players. It's more like poker.
You don't win at poker just by playing smart cards. You win at poker by understanding other players predictable behaviour, ie understanding the market, as it is driven by other players.
Though markets do grow and there are some 'bonus surpluses' for everyone, most firms do not win off this - they can only win if someone else loses.