Abstract

The fact is non-traditional mutual funds are not really substitutes for hedge funds. To be sure, individual styles of non-traditional funds…share many basic characteristics with their corresponding hedge fund styles….A fund that needs to be ready for redemptions at a moment’s notice or that is heavily restricted on the leverage it employs is always going to have a difficult time achieving the same level of excess returns as a hedge fund pursuing a similar strategy without such restrictions in place….We repeat: non-traditional mutual funds are not hedge funds. - CIO Reports, Monthly Outlook, Private Banking & Investment Group, Merrill Lynch Wealth Management, April 2013, pp. 1-2. For the first time since Morningstar began its alternative investment survey, institutions are beginning to use alternative mutual funds to replace some hedge fund investments. - “Institutions Are Warming to Alt Mutual Funds”; TheMutualFundWire.com; July 10, 2013

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