In August of this year, prime broker Merlin Securities, LLC released a white paper dividing the universe of hedge fund investors into ten categories, and arranging those categories along a spectrum from least to most “institutional.”  By institutional, Merlin was referring to the demand placed on hedge fund managers by each type of investor with respect to assets, operational practices, risk management, track record, reporting and other factors.  On September 23, 2010, at an event hosted by accounting firm Marcum LLP, Ron Suber, Senior Partner at Merlin and an author of the white paper, expanded on the institutional investor spectrum and its implications for hedge fund marketing.  This article outlines the Merlin investor spectrum and details the key takeaways from the Marcum conference with respect to hedge fund marketing, including a discussion of hedge fund seeding by pension funds.  Like any analytical framework, Merlin’s spectrum is intended to help managers clarify their marketing efforts and develop reasonable expectations, rather than to apply without alteration to every factual context.  As discussed more fully below, according to Merlin, it generally would not be realistic for a startup manager to target only pension funds in its marketing efforts; but by the same token, as discussed at the Marcum event, some pension funds have explored or executed hedge fund seeding deals, so startup managers should not rule out marketing to pension funds altogether.  See “How Should Hedge Fund Managers Adjust Their Marketing to Pension Funds in Light of Potential Downward Revisions to Pension Funds’ Projected Rates of Return?,” Hedge Fund Law Report, Vol. 3, No. 11 (Mar. 18, 2010); “The Four P’s of Marketing by Hedge Fund Managers to Pension Fund Managers in the Post-Placement Agent Era: Philosophy, Process, People and Performance,” Hedge Fund Law Report, Vol. 2, No. 45 (Nov. 11, 2009).