Top funds are boasting annual returns of nearly 70 per cent - or 20 times the amount banks are paying on fixed deposits - exciting some investors into leaping before they look, experts claim.

But the nation's securities watchdog claims many funds have failed to learn from the catastrophic collapses following the global financial crisis by improving disclosure, particularly about what they are investing in and calculating performance.

"When funds are not adequately disclosing risks, investors are put in a vulnerable position," warns Australian Securities and Investments Commission chairman Greg Tanzer.

ASIC reviewed a sample of the estimated 130 property syndicates and unlisted retail funds and found them wanting on a range of issues from pricing their assets, to borrowings, and what and when they are making payments to investors.

The industry's peak body, Property Funds Association, denies the claims, saying big efforts have been made to clean up the sector. It accused the regulator of not looking hard enough.

But there's been enough investor blood spilt in recent years to make even the most foolhardy think twice before committing too much of their savings.

For example, more than half the funds frozen - which means investors could not access their capital - in the wake of the GFC are yet to have been re-opened to new investors or to have dispersed remaining funds.

"I'd be very careful," says Kevin Prosser, research manager of direct assets for Lonsec Research.The returns are extraordinary and need greater explanation about how they are being produced.

"Make sure it is a total return from income and capital growth and not the capital paid back for investors, which would distort the fund's return."

Brendan Shannan, a financial advisor at Johnson Partners, has witnessed the hardship and grief of hundreds of investors who lost more than $200 million in trusts they believed would provide regular income.

Shannan has spent years seeking payouts or compensation for investors in the funds invested in assets ranging from shopping centres to industrial estates.

"Investors need to understand they are complex legal and financial structures that stack the cards in favour of the directors, often at the expense of the investor," he says. "Some are terrific investments, but there are enough hard stories out there to convince even the most optimistic and trusting investors to seek independent advice and fully understand the risks."

Investors hoping for a repeat performance of recent strong performance need to be aware many of the funds typically only have one, or a handful, of properties, which means they could boom or bust from one-off factors, such as a revaluation.

Performance can also be boosted by capital repayments, which developers routinely make to investors after selling properties.

"There is nothing wrong with people being repaid their money, but what happens with some income-producing trusts is they pad out distributions with return of capital from investors' own money," Prosser says.

Prosser warns that high returns normally indicate higher risk, narrow investment base, which means there is little insurance against a market correction, the impact of which could be exacerbated by high levels of borrowing.

"For income-producing funds it is going to be unusual to have returns of more than 20 per cent year-in, year-out," Prosser says. "The 60 per cent to 80 per cent stuff is much higher risk."

One top performer, which posted a 12-month return of about 30 per cent, pays a monthly distribution of 16 per cent and includes a 15 per cent return of capital, which means investors are receiving part of their investment back.

"This distorts the actual return on equity that should be quoted," Prosser says about capital being included in total returns.

PIR, a company that monitors property funds, claims improving property market conditions, investor search for higher returns, low interest rates and an unshakeable faith in property are drawing investors back into the riskier end of the market.

The popularity of recent launches is a "potential sign that unlisted investors are willing to move away from simply traditional [funds] and back up the risk curve".