Despite their warm reception, it seems that hedge funds-of-funds may not be as smart an investment as they at first seemed, according to The Wall Street Journal.

Funds-of-funds attracted investors in droves between 2003 and 2004 because they offer the chance to invest simultaneously in several top-performing hedge funds, much like a broad stock-index mutual fund. However, it turns out, critics say that the hedge funds-of-funds trail, not track, the funds they invest in. Indexes managed by Chicago-based Hedge Fund Research, for example, are down 8% this year, or settling at about $2.4 billion.

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