Yes I'm aware of that, but it doesn't change the reality that hedge funds have an incentive to have more money from fewer investors, even if they have to be careful not to take on too much money overall.
Hedge funds are at best going to net break even as an industry after fees, quite probably negative. So to look at "Funds of funds" and say they're a good idea is pretty mind boggling.
"Managing money is easy. Managing investors is hard."