Demarcation lines between mutual funds and hedge funds have slowly but steadily diminished as more mutual fund organizations roll out new products utilizing hedge fund strategies. As hedge funds continue on their growth path, increasing numbers of traditional investment managers such as mutual funds are studying for ways to get a piece of the action by establishing their own hedge funds as well. But many argue that when mutual fund managers run hedge funds, such condition invariably can create conflicts of interest.

Hedge funds have over the years experienced a record busting growth, as wealthy persons and institutions poured in assets into alternative investment instruments. Hedge Funds are for the most part loosely regulated investment products, accepting minimum investments of usually about $1million. Unlike Mutual Funds, Hedge funds usually bet on stock declines, as part of its investment strategy. The mutual fund industry has gradually been introducing new products, which use sophisticated hedge fund strategies; such new products are aimed at the growing number of mutual fund investors seeking hedge fund investment strategies.

There is also another point, the high minimum investment requirements for investing in hedge fund strategies have been trending lower, few years back, minimum hedge fund investments were typically about $500,000 to $1 million. Today some hedge fund of funds accepts about $25,000 to $50,000 as minimum investments. While mutual fund assets dwarfs those of hedge funds, about $7 trillion and $1 trillion respectively, hedge funds have continued on an accelerated growth path, from about $500 billion about one decade ago, to over $1 trillion today.

Paul Oranika   Editor-in-Chief

Hedgefundexchange.net

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