How to invest like a hedge fund whale on the cheap

Carl Icahn
David Grogan | CNBC

Hedge fund investing is expensive, but following what the big-name managers do is not.

Such is the premise of "clone" funds, a small but growing sector of the market in which managers track what the best names in the hedge industry—think Leon Cooperman, Carl Icahn or David Tepper—are doing via the 13f disclosure forms they must file with the Securities and Exchange Commission.

Rather than fork over the infamous 2-and-20 fee structure that hedge funds use, investors can pay exponentially smaller sums to get in the clone exchange-traded funds.

Returns for the most part are unspectacular—but so are those for the hedge fund industry in general—and they have their share of detractors. Critics point out, for instance, that 13f filings are backward-looking and do not include short positions.

However, adherents believe clones are a great way for investors to get access to picks of some of the world's top investors without having to incur the costs or do the legwork.