Title: Do funds-of-funds deserve their fees-on-fees?
Description: "Since the after-fee returns of funds-of-funds are, on average, lower than hedge fund returns, it is easy to conclude that funds-of-funds do not add value compared to hedge funds.  However, funds-of-funds should not be evaluated relative to hedge fund returns in publicly reported databases.  Instead, the correct fund-of-funds benchmark is the set of direct hedge fund investments an investor could achieve on her own without recourse to funds-of-funds.  We use asset allocation concepts to estimate characteristics of the fund-of-funds benchmark distribution.  Since the benchmark characteristics are reasonable, we conclude that funds-of-funds, on average, deserve their fees-on-fees"--National Bureau of Economic Research web site.