Personally, I don't compare my returns to the 'risk-free' rates like 10-year US treasury bonds. Since the current yield of the 10-year US treasury bond is 2.76%, then if your yearly returns are 2.76%, then you're Sharpe Ratio is about 1.0 (give or take). The only Sharpe that I use is for writing with. I think the article is suggesting that the average hedge fund is finding it difficult to make yearly gains that beat the 10-year bond yields due to lower volatility in the market. I totally agree with this. Interestingly, the top hedge fund in 2012 made a YTD Total Return of +37.8% which means a Sharpe Ratio of about 13.7 (i am not including standard deviation calculation since I don't know the performance of other years). Top dog looks pretty good.
You win some, you lose some.