The negotiations between GLG Partners and star manager Greg Coffey serve to illustrate an old adage often cited by institutional investors when grilling potential managers - do not rely on your stars, they will eventually fall to earth.

According to The Times, the London-based hedge fund hedge fund manager is 'fighting to hold on to one of its star managers after Greg Coffey moved to quit the USD24bn firm to set up his own business'.

The newspaper indicated, that Coffey "generated about 60 per cent of GLG's performance fees last year.  The assets he looked after represent almost a third of GLG's managed funds.  His emerging markets fund generated a return of 50 per cent last year".   

To an outsider - and some institutional investors - the figures suggest that GLG places an undue reliance on Coffey. However, they may be missing a key point that has been somewhat lost in the move of hedge funds to the mainstream. Hedge funds were founded by stars, individuals with a passionate belief in the outcome of their investment strategies, who were prepared to bet their house along with their investors.

The business has changed somewhat since those early years, with the entry of large institutional investors and sizeable mandates. The resulting pressures of due diligence and compliance are now starting to hamper the stars and favour the method-men, resulting in many stars leaving to set up their own investment boutiques - albeit where they too, will inevitably join the mainstream.

As the hedge funds industry continues to evolve, there will be fewer stars and more method-men coming to the fore. The loss will be felt by all.