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Alternative Market Briefing

Rising demand for separate managed accounts brings excellent conditions for hybrid mutual fund of hedge funds

Tuesday, July 14, 2009

From Kirsten Bischoff, Opalesque New York:

Last week, North Carolina-based Hatteras Funds announced the acquisition of AIP Mutual Funds, and with it, the management of two mutual funds of hedge funds (FoHFs). Opalesque had a chance to speak with David Perkins, CEO and Founder of Hatteras Funds, and Mike Hennen, Director of Public Investments about this hybrid fund structure, which has offered a fund of funds to mutual funds investors since 2002.

According to Perkins, although there are a number of mutual funds which offer hedge fund strategies (i.e. 130/30 funds, replication funds, and long only hedge funds with hedge overlays), the AIP Alpha Hedged Strategies Fund (which has returned +7.05% YTD) and the Beta Hedged Strategies Fund (which has returned +7.65% YTD) were unique in offering a FoHFs strategy in a mutual fund structure.

The two funds offer investors daily liquidity, no lock-ups, no performance fees, and an increased level of transparency due to the separate accounts the fund uses for allocations into various hedge fund managers.

“In a post Madoff world that is really what people are looking for,” Perkins said. “Our clients came to us and said, we have to have daily liquidity, we have to be invested in a registered fund, we need to have 100% transparency, and we would really like t......................

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