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...