More than half of the large U.S. pensions’ HF assets were invested w. single managers

Bloomberg reported earlier this month on the trend among pension-plan investors to shift from using funds of hedge funds to investing directly in individual managers (Source.) One of the reports said that U.S. hedge-fund investors were paring the roughly $80 billion they pay in annual fees by cutting out the middlemen. For the first time, more than half of the hedge-fund assets of the 200 largest U.S. pension plans were invested with individual managers last year, data compiled by Pensions & Investments show. The proportion of pension assets overseen by funds of funds fell to 49% on Sept. 30 from 57 percent in 2002, when the magazine started collecting the information. (Source.)

While it’s easy to think that hedge fund investors have grown tired of diversification and are now placing bets on their favourite horses, that’s not necessarily the case. Many of the converts to so-called “direct investing” in hedge funds are now essentially running in-house funds of funds themselves (effectively with one client), noted AllAboutAlpha.com.

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Suss-----are you getting more or less money for your fund because of that type of allocating?