We've been talking about the cross-pollination between the hedge fund industry and the mutual fund industry for a while now--in the context of retail-oriented funds of hedge funds, the rise of 130/30 funds and the recent move of hedge funds into the traditional mutual fund category.

Diamond Oak Capital Advisors is laying the ground for the rise of what it calls "hedge fund mutual funds." It basically puts a hedge fund strategy into a "transparent, publicly available mutual fund structure," notes Business Insider. "We predict that within the next 3-5 years, the world will see hedge funds abundantly offering public vehicles housing their strategies, a Hedge Fund Version 2.0," said the firm.

The main idea is to combine a more user-friendly reporting and due diligence structure with a lower investment threshold to capture more investment money--which sounds great in theory. One consequence may be a slight change to the economics for end users. If such funds take off--we're already seeing that a bit with the rise of passive hedge fund vehicles--then it could pressure performance fees for traditional hedge funds.

This isn't a really new idea. But it remains one that the industry isn't giving up on. The fact is there's a whole lot of retail money out there and a lot of institutional money that may be willing to try new things. 

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