This is the question failed and struggling hedge funds are increasingly asking their investors as they slash fees in exchange for – hopefully – getting financial backers to stay on board. A lineup of the latest funds offering this mea culpa.

A growing number of hedge fund managers are trying to persuade investors to back new ventures by offering discounted fees to help make up for losses at funds that have failed.

The latest are the $3bn London hedge fund Endeavour Capital and the $2.5bn flagship fund of New York’s Drake Management, both offering to waive performance fees on new funds until they have made back the disastrous losses that prompted their closure.

The moves break with a tradition of hedge fund managers simply setting up a new fund, thereby avoiding the so-called high water mark – the rule that 20 per cent performance fees are paid only on profits that beat previous highs.

“Everyone is on to that little scheme,” said David Smith, who oversees $28bn in hedge fund investments at GAM. “If you were a savvy investor, you would demand the high water mark be carried over.”

It can be tough to balance investor demands for lower fees and management’s need to attract new staff or partners with fat bonuses.

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