Hedge fund firms that launch multiple funds on average underperform those with one fund by 2.80% per year, new research has found. Associate Dean (Research) of the SMU Lee Kong Chian School of Business Professor Melvyn Teo and fellow researchers found that performance of flagship funds deteriorates by 4.83% per year following the launch of the first non-flagship fund. However, they also found that firms with successful flagship funds can launch non-flagships that charge higher fees, set more onerous redemption terms and attract greater inflow. "Is this beneficial to investors? No," Prof Teo said, presenting the findings at the Lyxor 5th Annual Hedge Fund Research Conference in Paris.