Exchange traded funds that track liquid alternatives or replicate hedge fund strategies are beginning to outperform traditional hedge funds that they were mimicking.

Goldman Sachs looked at 337 “hedge fund-like” funds from Morningstar’s universe of 677 liquid alternative funds and found that hedge fund investing categories like equity long/short, event driven, relative value, macro and multistrategy often did better than the hedge fund indexes, reports Matt Turner for Business Insider.

“All five LAI Peer Groups outperformed or performed similarly to the related hedge fund indices last year,” Goldman said in a note.

The liquid alternative investments, though, still underperformed the traditional assets last year, along with most hedge funds.

“While absolute performance may have been underwhelming, the following analysis demonstrates that liquid alternatives performed in-line with their private placement or hedge fund counterparts,” Goldman added.

Nevertheless, liquid alternative funds provided a much cheaper way to access the same kind of hedge fund-esque exposure – hedge funds may include a normal management fee of 1% to 2% on top of a performance fee of as much as 20% of annual gains.

Investors can also tap into these alternative strategies through specialized ETFs. For instance, the PowerShares Multi-Strategy Alternative Portfolio (NasdaqGM: LALT), ProShares Morningstar Alternatives Solution ETF (NYSEArca: ALTS) and IQ Hedge Multi-Strategy ETF (NYSEArca: QAI) provide a multi-strategy approach to a number of hedge fund strategies. Specifically, ALTS employs long-short strategies, hedge fund replication, managed futures, global infrastructure, merger & acquisitions, private equities and Treasury spread investments.

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