Fund of Funds Losing Assets

Investors are finally catching on to what may have been the best fee-skimming scam of the past decade: the fund of fund. 2009 has turned out to be the worst year on record for funds of funds, with net redemptions totaling $164 billion in the first 11 months of the year, leaving total assets at $440 billion. The fact that $440 billion remains invested in these money-leaching parasites is a bit of a mystery given how lousy performance has been in 2009. Funds of funds have underperformed hedge funds by around 9% this year. Ordinarily funds of funds underperform by a few percentage points, mostly due to their fees. But this time, it appears as if the underperformance was marred by poor investment choices as well, that included large allocations towards ponzi schemes. Why pay a money manager a bunch of fees so they can pay someone else higher fees, if they can't be bothered with investing in the best performing funds? It seems as if I'm not the only one asking these questions anymore.