Are Fund of Funds Dead?

From time to time, I will see an intelligent article written by another blogger.  I recently read a posting written by Simon Kerr about the Eurekahedge report for 2010.  The report showed that assets were flowing back into hedge funds but had not recovered for funds of funds.  Other points that he makes are:

• For the past three years, funds of funds have a negative return while being as risky or volatile as single manager hedge funds
• North American institutional investors are confident enough to invest in hedge funds directly.  They no longer have to rely on funds of funds expertise.
• Funds of funds are supposed to supply due diligence to avoid blow-ups and investing in  underperforming hedge funds.  They failed to do that in 2008.
• For other regions, there is still a place for funds of funds.  The example that he gives is that Japanese investors will need a fund of funds to invest in North American hedge funds.

The complete post is here.