Goldman Sachs has become the first bank to create a hedge fund replication tool in a move that could lead to a shake-up of the $1,300bn hedge fund industry.

The platform will greatly undercut the notoriously high fees of the hedge fund sector. Those investing through a fund of funds can end up paying annual charges of 4-7 per cent, with up to 50 per cent of their returns eaten up by fees. Goldman will charge a flat 1 per cent.