fof investors are basically outsourcing manager selection and portfolio management.
fofs typically have better access to and understanding of hf investments. and this is the justificaiton for their fee.
I can tell you that there are a lot of different examples that you can think of that will give you different answers, like being in a bad fof vs. being in renaisance. or being in a great fof vs. being in amaranth
In reality though, the typical fof investor does realize lower returns than a direct hf investor. This isn't caused by lower volatility perse, but these returns are gladly given up in order to reduce volatility. This has a lot to do with the source of funds flowing into fofs, mostly liability driven investors seeking hedge fund exposure that is uncorrelated to the balance of their portfolio.
This is also why many of the large funds have been lifting out smaller teams in hopes of developing in hosue multi strat funds that work effectively like a fof, but without the extra 1/10 in fees. Also, you will see increasingly more structured products driven off of hedge fund indices.
Both of these developments serve to surf the same wave as the fofs, delivering safer lower returns than some unsophisticated selection process at a pension meeting somewhere