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Hedge Fund Strategies in Mutual Funds

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Advisors who may have wanted to use hedge funds for certain clients–but couldn’t because of the high minimum investment and fee structures that were barriers to entry for most investors–may want to look into a pair of new mutual funds that use hedge fund strategies in mutual fund wrappers. Rydex Investments has announced two new mutual funds that employ a variety of hedge fund techniques to provide investors with “true diversification not achieved through long-only” asset allocation, says Jeff Joseph, managing director of Rydex Capital Partners in Rockville, Maryland. Joseph also writes a monthly Investment Advisor column, Hedge Fund Focus.

Rydex Absolute Return Strategies Fund is a multi-strategy portfolio that combines long positions in equities, fixed income, commodities, and currencies with hedge strategies that include market neutral, fixed-income arbitrage, merger arbitrage, and long/short equity.

Rydex Hedged Equity Fund uses long/short hedging “across a variety of asset classes and strategies in a single investment,” adds Joseph. The funds are both quantitatively-driven, and endeavor to provide “low correlation to traditional investments, lower portfolio volatility, and positive performance in a range of market conditions.”