A June 2011 report summarized the results of a survey (Survey) of pension and sovereign wealth fund investors as well as hedge fund managers.  The Survey had two primary goals: (1) tracking the shift of these investors from funds of funds to direct allocation models; and (2) identifying the predominant characteristics of hedge fund managers who received these newfound direct allocations.  Overall, the Survey found that the shift to direct allocation among these investors has been dramatic.  The managers who have benefited most from this transformation are those with assets under management (AUM) of between $1.0 billion and $5.0 billion, a range the Report dubs the “sweet spot.”  This article details the key findings from the Survey and the key conclusions of the Report, focusing in particular on: the factors leading to direct investing; approaches to direct investing; the three primary vehicles used by pension funds and sovereign wealth funds for direct investing; the manager selection process; criteria used by pension funds and sovereign wealth funds to evaluate direct managers; and the pivotal role of consultants.