Playing the Hedge Fund Craze

Just because awareness about hedge funds is growing among retail investors, mutual fund companies will most assuredly not start stocking the shelves with new hedge fund products to feed the retail masses. The regulatory and operational headaches of marrying mutual and hedge funds still remain unattractive to many potential managers, which is why there are fewer than 20 funds that use hedge fund tactics.

"From a managerial standpoint, hedge funds are easier," says Ferrell, who also runs a $5 million hedge fund along with the Rock Canyon Top Flight fund. "There's less compliance, less oversight and less reporting, all three of which take away from the goal of managing money and trying to earn investors a profit." In 2004, Ferrell's hedge fund was up 28%, while his mutual fund was up 13%.

From a mutual fund investor's perspective, however, those additional managerial headaches can afford a great deal of comfort for those interested in seeing how the big boys invest.