Through Nov. 30, hedge funds of funds declined 5.3% year-to-date according to the EDHEC-Risk Institute. Of the more than $10.4 billion in hedge fund allocations that Pensions & Investments has tracked thus far in 2011, 74% went to direct managers. The only large allocations to funds of funds came from the $14 billion Kentucky Retirement Systems, $119.9 billion New York City Employees' Retirement System and $36 billion Los Angeles County Employees' Retirement Association, which accounted for $1.9 billion, or 71%, of the hedge funds-of-funds total. Thus far in the fourth quarter, only one hedge funds-of-funds manager has been hired, while there have been 63 direct hedge fund manager hires. Although performance is only one reason a pension fund might go the direct hedge fund route, hedge funds of funds' poor performance is a significant headwind.