When investment consultants begin their hedge fund selection processes, they often start with the assumption that the funds are not worth the fees they charge. They hold hundreds of meetings with hedge fund managers every year, looking at anything from the performance to the personality traits of individuals, and spend up to 200 hours evaluating a single hedge fund, but they endorse less than a handful.

Hedge fund managers covet these endorsements because of the influence the consultants have in determining the investment decisions of pension funds.