There have been a lot of mutual fund companies gazing longingly at the hedge fund industry--and vice versa. There's apparently a lot of synergy between the two sides. We know this, and yet it is still surprising every time we hear that Vanguard wants to launch a hedge fund. That day seems to be inching closer. 

Vanguard has filed for permission to launch an absolute return fund, according to Morningstar and news reports. The new fund would be part of Vanguard's Managed Payout Funds line and would likely be domiciled in Ireland. If the application is approved, the new fund would be able to use leverage, derivatives and short-sales, according to FINAlternatives. Vanguard's other three Managed Payout funds would each invest in the new fund. There is no guarantee that Vanguard will actually make this leap, but why not? 

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