From the February 2010 issue of Boomer Market Advisor • Subscribe!

February 1, 2010

Hedging your clients' retirement bets

Innovative? Disturbing? Disturbingly innovative. We'll let you decide. But in an effort to come down market on the wake of the hedge fund quant implosion at the end of the last decade, the Wall Street Journal reports on one hedge funds efforts to attract "mom and pop." How they differ from traditional fund-of-funds and other "hedged" mutual fund strategies is anyone's guess, and reeks of old ideas with new packaging.

"AQR Capital Management LLC, which was among the first big hedge funds to launch a line of mutual funds for mom-and-pop investors, has raised more than $1 billion in assets in less than a year, a potential challenge to the struggling mutual-fund industry," according to the paper.

AQR launched its seventh mutual fund in early January, a managed-futures portfolio that seeks to take advantage of trends in commodities, bonds and other markets. The fund is called AQR Managed Futures Strategy Fund.

"The hedge-fund industry saw record amounts of overall investor selling, or outflows, and poor performance in 2008, leaving many managers with an appetite for the less profitable but 'stickier' assets of mutual-fund investors."

According to the paper, other hedge funds embracing this new mutual fund strategy include:

  • Rady Asset Management LLC launched Rady Opportunistic Value Fund in October
  • Bull Path Capital Management LLC in June introduced Bull Path Long Short Fund
  • Legg Mason Inc.'s Permal Group, a major fund-of-hedge-funds provider, started Legg Mason Permal Tactical Allocation Fund in April.
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