Assets in hedge fund mutual funds rose 23.4% to $10.5 billion in the five years ended June 30, according to a new report from Cerulli Associates. The report, "Hedge Funds: The Market for Absolute Return," also analyzed mutual fund data from Morningstar and found an additional $200 billion to $300 billion is being managed using various hedge fund techniques by managers such as Bill Miller of Legg Mason and Marty Whitman of Third Avenue, said Benjamin Poor, Cerulli senior analyst. Mr. Poor defined hedge fund mutual funds as open-ended mutual funds using a hedging strategy.
Mr. Poor said despite the reputation mutual funds have as a so-called "retail" vehicle, hedge fund mutual funds may be a good solution for small defined benefit plans and endowments and foundations, as well as more sophisticated defined contribution plans, because they are less expensive than hedge funds, require lower minimums and offer much better transparency and liquidity.
