The front page headline of the September 19, 2005 issue of Pensions and Investments newspaper reads: "Hedge Funds: Fund-of-funds inflows down 40%: Rising sophistication of investors cited as one reason for decline." This article describes a shift in investor preferences away from fund-of-funds and toward individual hedge funds, and attributes this shift to investors' growing confidence in their own ability to make that selection, coupled with their concern that fund-of-funds have taken in more capital than they can handle.

A Modest Proposal to Modernize the Performance Evaluation of Hedge Funds