The risk associated with hedge funds is pushing some investors to test hybrid funds. HedgeWorld reports a variety of companies are creating open-end mutual funds that are managed via hedge fund strategies, opening the market up to a larger pool of investors because institutions with less than $5 million in assets are allowed to invest. According to HedgeWorld, New Jersey-based RegentAltantic Capital suggests that clients invest 20% of their portfolios in alternative funds and 8% of devoted to absolute return-run funds. Geronimo Financial Asset Management founder and CEO David Prokupek told HedgeWorld that absolute return mutual funds offer some of the same benefits limited partnership hedge funds do, but the returns are a bit lower. From 2001 to 2005, mutual funds in long/short equity earned 5.2% returns, while hedge funds with similar strategies saw gains of 5.8%. However, a departure from the traditional 50/50 stock/bond investment strategy might have just as much impact as the fund type as funds with a 30% distribution among long/short, multi-strategy and neutral funds yielded higher returns that equally split stock/bond funds. Geronimo’s market neutral Option & Income Fund made 9.3% for common stock, its long/short Sector Opportunity Fund brought in 7.7% and the multi-strategy yielded 5.3%. With a difference in ROI numbers running just less than a point in some cases, annual fees make a difference. Geronimo funds charge a 1.25% management fee based on performance and a 2% expense ratio for common shares, reasonable numbers compared to average hedge fund charges.