IAmNeil

I think the first step to look at these funds is whether the strategy is alternative beta or an alpha strategy?

If it's alternative beta (a commodities index fund for a simple example), can the mutual fund '40 act structure truly access the asset class? For instance, a lot of research is pointing to market neutral funds being more alternative beta than manager alpha, can a '40 act fund provide true exposure to that beta? In some strategies/asset classes the answer is yes, in some no.

On HF replication, there hasn't been any great emperical evidence that replication works. I personally believe that a lot of HF performance is alternative beta/segmented markets where a passive approach makes sense, but we're still not there on the product side.

If it's a alpha strategy, why is this manager working in a mutual fund environment? It's easy math, if he is successful, he'll make more money in the HF world.

This is an overly simplistic analysis, but I prefer most of my alternatives to truly be alternatives.