The people who run funds of hedge funds routinely comment that there may be 15,000 hedge funds on the market, but only 150 or so make the grade. Presumably they are not the same 150 across the board, or the performance of funds of funds would be within a small range. Presumably, also, the qualifying 150 change over time, given that another standard observation is that hedge fund performance deteriorates after about three years.

But that still leaves only a relatively small proportion of the available hedge fund universe judged to be of sufficient quality by those in the know. Who judges the fund of fund managers? Is the ratio of quality to quantity a similar one? These are important questions judging by the opinions expressed in a survey by Watson Wyatt, in association with the Financial Times.