Institutional Investing Goes Mainstream

Mainstream investors who want access to institutional investing strategies like those used by large university endowments and pension funds now have a way of getting it.

Rydex Investments recently launched Essential Portfolios, three products that invest in a combination of the company's mutual funds to get exposure to everything from stocks and bonds to alternative assets --such as commodities and currencies -- and hedge fund-like strategies.

These funds-of-funds -- or mutual funds that invest in other mutual funds -- focus largely on risk and are designed to provide retail investors with a higher level of portfolio diversification. The idea is to decrease vulnerability in bear and sideways markets, though that also means returns will be more muted in an up market.

"If the market booms, they won't do as well from a relative standpoint, but in a sideways or downward market, these products are likely to outperform," says Phil Fragasso, a senior vice president of marketing at Rydex. ...