A new breed of absolute return hybrid funds are starting to make a serious run
If you thought big mutual fund giants had fumbled a move into the hedge fund industry, think again. Very quietly, without anyone noticing, these conglomerates have successfully launched their own version of absolute return products, which from the outside look like a mutual fund, but inside behave exactly like a hedge fund.
And they are doing pretty well. These quasi-hedge funds are taking in money and, more importantly, performing well. Many of the hybrid mutual hedge funds actually outperformed their far more glamorous rivals in the mainstream hedge fund business last year, although some have been caught out by the recent equity market rally since the early summer.
This year alone, $3 billion in assets have flowed into these quasi-hedge funds, according to Morningstar, the group that tracks the mutual fund industry. Charles Schwab, the...