digit gains that made the industry famous in the late 1990s or the positive returns delivered during the bear market when stocks stayed in the red for three straight years. Even as hedge fund returns have come off -- they lagged stock market returns last year, too -- their fees haven't budged, irritating pension fund and endowment officers who have funneled billions into the $1 trillion industry recently. For an investment of $1 million, a hedge fund can charge a $10,000 management fee plus a 20 percent performance of whatever gains the manager makes. And because hedge fund investing can be risky, clients often employ a consultant or fund of funds to help select the right investments, adding anywhere between $10,000 and $50,000 to the annual bill. Mutual funds generally charge only a management fee and no performance fee, which makes them significantly cheaper. A survey released this week by ICBI highlighted pension funds' current dissatisfaction with performance and fees at fund of hedge funds. Earlier in the year, a study by Deutsche Bank showed that hedge funds are likely to take in only $40 billion in the next year, down from the $123 billion they added in 2004. Even hedge fund managers are sensing some reluctance among investors. One fund manager, who did not want to be identified but whose fund has returned 14.0 percent this year, said investors aren't flocking to the fund they way they used to. "People are getting more nervous," the manager said. "This month, for example, the market is down and we aren't making money and people are backing off a little bit."
