This is where hedge FoFs come into their own. They are the only players which have the resources to research and gain access to smaller hedge funds. Even a medium-sized FoF such as FRM, which has about $9 billion under management, has an internal team of more than 160 professionals. Not even the big global asset consultants can match such specialist hedge fund research resources. Nor can they develop managed account structures the way firms such as FRM are. Keary says that FoFs which now offer their services to build individual portfolios for clients are not really competing with the asset consulting fraternity. “Consultants still set policy. But we have a competitive advantage in manager selection and the rest of the process,” he says. “So as large investors work through the in source/outsource decisions there is no doubt that the deepest resources in manager research, operational due diligence, portfolio construction, execution, monitoring reside in the FoF model. The question is can fiduciaries acquire those resources on terms that represent value for money to the investor? The only way to find out is to ask.”