Depends on a few things.
1) How do you expect this fund to perform in a volatile or falling market? If it's going to be a winner in those scenarios, a 10% decline may be forgivable, as it will act as a hedge when the market turns sour.
2) How does this figure into your portfolio as a whole? If your assets are sufficient, and this is part of an alternative asset class bucket, it may be fine.
3) What does the fee structure look like? Paying the traditional 2+20 is a tough pill to swallow in an illiquid market with few opportunities.
4) What is the explanation of the underperformance? Do they trade a strategy that regresses toward the mean or is the loss simply water under the bridge?