HedgeCo.Net carried an announcement of the opening of the Frost Diversified Strategies Fund (FDSFX), which is supposed to provide "investors access to alternative investment management strategies previously available to hedge fund and private equity fund investors." The objective is to appreciate in up markets and outperform in down markets. The fund will have 60% of its assets invested in traditional assets and 30% of asset will be invested in a "hedge replication module" which will be supported by "publicly available products." Apparently, the hedge replication module will be invested primarily in products that replicate the performance of hedge fund, commodity, and currency indexes. The fund carries a 0.80% management fee and expense ration of 2.00%.
Mutual funds trying to utilize or replicate hedge fund strategies are not new. PIMCO Total Return has used futures, options, and swaps strategies to add value in a very competitive bond market. A few years ago saw a wave of "130-30" funds attempting to implement the original hedge concept. And about three years ago, Absolute Investment Advisors launched the Absolute Strategies Fund (ASFIX), a fund that employs eleven sub-advisors, each of which manages a portion of the fund using a strategy typically reserved for hedge funds. There are also those publicly available products to provide exposure to alternative strategies.
The point is that there are many options available to the individual investor to participate in alternative assets and strategies, most with a lower cost structure and almost all with a track record that can be evaluated. FDSFX may emerge as a viable option, but I would recommend patience in assessing its usefulness.
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