Some hedge fund index providers charge fees to the hedge funds they include, via managed-account structures, in their indices. Such 'rebating', they say, reflects the cost of due diligence and other services they offer as platform providers.
However, there are a number of critics of the system who say it hides costs from investors.
Among the main index providers are HFR, Lyxor, Standard & Poor's and CSFB. HFR has around $4bn in its indices, Lyxor $3bn and Plus Funds also around $3bn - a total