Yield-hungry investors are increasingly looking to alternative sources of income and one niche area of the exchange-traded fund industry has attracted considerable attention this year. Hedge fund ETFs, which aim to replicate hedge fund returns, grew assets by 15% in the seven months to the end of July, according to ETFGI data, as investors took advantage of the greater liquidity they offer versus direct investment in hedge funds.

However, the different methodologies used to generate hedge fund-like returns produce markedly different outcomes.