No kidding. Stock mutual fund managers and funds of hedge funds manager are not all that different. That's one conclusion of a recent study highlighted on AllAboutAlpha.com.

As you know, the financial crisis and its aftermath have not been kind to the fund of hedge funds industry. It has certainly been adept at garnering assets, but it's investment returns have been woeful. Still, the study finds that "funds of funds add value over and above the return an investor would get if they were to just buy a generic hedge fund composite index (specifically, the HFRI)," notes AllAboutAlpha.com.

"The source of this value-added, they argue, depends on the situation in financial markets. During 'normal times' the value-added delivered by funds of funds results mainly from picking the right funds (analogous to 'security-selection' in traditional attribution analysis)." But in the financial crisis, "the main source of value-added was strategic allocation, i.e. the buy-and-hold choice of various alternative betas," writes AllAboutAlpha.com.

Mutual funds are also adept at strategic allocation, which led the authors to conclude that the two manager types are quite similar. Or at least they have been similar in the wake of the financial crisis--which perhaps makes funds of hedge funds' fees a bit harder to justify.

For more:
- here's the article

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