The hedge fund mutual funds continue to gain traction in the investment universe. The category has been hot since 2009 at least. A critical source of demand is financial advisors, who continue to look for a winning story to tell their clients. They need new ideas, and hedge fund mutual funds fit the bill.

For better or worse, high net worth individuals want to run with the perceived big boys, and that means hedge funds. But they also want value, and that's what mutual funds offer in terms of costs and liquidity. Increasingly, they are being seen as alternatives to hedge funds of funds.

The best marketing story to tell may be hedge fund managers getting into the arena, especially those with good track records. According to the Financial Times, established hedge managers "are moving into the regulated fund space by building their own operations or serving as sub-advisers to mutual fund market partners."

AQR Capital Management and Permal Asset Management are among those who are testing the waters. AQR has built on its expertise in strategies such as managed futures, convertible arbitrage and market neutral products to create retail products such as diversified arbitrage, managed futures risk parity and momentum mutual funds.

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