While the growth of alternative mutual funds is significant — some of which is fueled by DC plans — and many hedge fund managers are participating either on their own or through sub advised relationships, many larger hedge funds have stayed away from the world of mutual funds, according to a report in P&I.
Last year a 54% increase in alternative mutual funds boosted them to $139.3 billion — up 292% from 2007. In a recent survey by InfoVest21, 17% of hedge funds sub advice; 27% intend to within 12 months; and 11% are considering it.
But many firms, especially larger ones not in need of additional assets, are not interested. Though fees are lower, the biggest inhibitors are the restrictions inherent within mutual funds that limit unconstrained strategies, in addition to illiquid assets and distressed debt that would limit returns. But based on the growth of the market and interest from many hedge funds, look for the sub advised alternative mutual fund market to grow, with a few considering offering their own mutual funds.
