As someone once said, RUN, DON'T WALK!!!!! to read this interview. Here is a sampling (I didn't realize he is this blunt):
Mr. Swensen: Fund of funds are a cancer on the institutional-investor world. They facilitate the flow of ignorant capital. If an investor can't make an intelligent decision about picking managers, how can he make an intelligent decision about picking a fund-of-funds manager who will be selecting hedge funds? There's also more fees on top of existing fees. And the best managers don't want fund-of-fund money because it is unreliable. You need to be in the top 10% of hedge funds to succeed. In a fund of funds, you will likely be excluded from the best managers. [Mr.] Madoff also relied enormously on these intermediaries. He wouldn't have had nearly as much resources were it not for fund of funds.
Consultants make money by giving advice to as many people as possible. But you outperform by finding inefficiencies most of the market has not yet uncovered. So consultants ultimately end up doing a disservice to investors . . .
My first thought after reading the interview was "I think David Swensen has been reading the Investor's Consigliere!!"
My second, and more accurate, thought was "I think the Investor's Consigliere has been reading David Swensen." No matter: if you do what I do and try to emulate one person (and you can't hope to marry Uma Thurman)--he's the one to emulate.