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These funds have an added layer of fees.
Most new investors back the sector via funds-of-funds, which collect a second layer of fees.
Funds of hedge funds, which have absorbed much of the new money, add on another hefty layer of fees.
Beneath this layer of fees are those imposed by each underlying fund, typically a 1percentt management fee and a 20percentt commission on profits.
A small part of the poorer performance may be accounted for by the extra layer of fees that subadvisory arrangements sometimes foist on shareholders.
The average fund lost 0.2% in the first half and the average fund-of-funds 1.4%, reflecting the extra layer of fees they charge.
Similar(38)
Or that funds of funds, often with two layers of fees, might offer slimmer returns.
A few additional layers of fees are a small price to pay for shifting that responsibility.
"With fund of funds, it is even more of a losing game because of the layers upon layers of fees".
"There are layers of fees, your control rights are zero and your costs are astronomical," he said.
But investors should read the fine print carefully, experts say, because these investments do not come cheap and can have layers of fees.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com