Columbia Management, which oversees more than $350 billion, is joining with Blackstone Group to increase retail investors' access to hedge fund strategies.
Blackstone Alternative Asset Management agreed to research and develop an investment offering, according to a statement from the Columbia.
Money managers have been adding alternative mutual funds to win clients and generate fee revenue. The offerings use approaches traditionally employed by hedge funds, such as betting against stocks through short sales or investing in non-traditional assets, including leveraged loans and commodities. In June, Columbia hired William Landes from Gottex Fund Management Holdings to expand specialized strategies.
“The objective is modest volatility, downside-risk protection and diversification against the other assets in the portfolio,” Mr. Landes said in an interview. “I would argue if a category like alternatives is able to deliver that, it is applicable to anyone's portfolio.”
Alternative mutual funds had about $158 billion at the end of October, compared with $111 billion 18 months earlier, according to Morningstar.
Blackstone's alternatives unit is the largest investor in hedge funds, with $64 billion under management. CEO Stephen Schwarzman said in April that individuals allocate too little to alternative assets, especially compared with institutional investors.