That's an incentive of any business owner that loses money. It's the duty of investors to review the managers reputation and not give money to known "fraudsters" (unless they can negotiate an incentive structure to prevent such problems).
With a fund, which is a separate vehicle advised by a management company, the fund can be closed with the knowledge (typically code, and who is gonna know if you take that?) kept and used to run another fund.
And it needn't be terribly blatant. If a guy has a reputation as a stock picker, he can do something like open a new fund for another geography or sector.
Investors can be strangely loyal, too.
Actually, you can if you declare bankruptcy.