Hedge funds are in the same situation, and their fees are even higher - fees of 2% of total Assets Under Management PLUS 20% of any gains are common. For all of that, they have experienced challenges beating indexes as well (down 6.4% for 2011, as measured by the Dow Jones Credit Suisse All Hedge Index - according to the article linked below).

http://www.forbes.com/sites/greggfisher/2012/01/23/chasing-t...