I would read that to mean that hedge funds are a small percentage of investment funds, but they are still important.
Interested in Language
please can you explain to me the meaning of 'notable but small exception' in the sentence below. Thank you
Most investment funds (with the notable but small exception of hedge funds) have minimal leverage or none at all, so if they run into trouble there is little risk that other lenders will suffer as a result. Alas, such contamination was a much bigger problem for the shadowy vehicles that issued asset-backed securities before the crisis.
I am not a teacher.
I would find it more natural to reverse the order, "...small but notable exception"