Lee Munson and Lorn Owen Davis provide independent fund research on AQR Diversified Arbitrage Fund (ADANX, ADAIX).

In this post-Madoff world, investors are not seeking hedge fund styled over-leveraging and high risk/return strategies. But this doesn’t mean that some of the classic strategies used by hedge funds aren’t useful for other investment vehicles, like mutual funds. AQR’s Diversified Arbitrage Fund (ADANX, ADAIX) allows an investor to have exposure to hedge fund strategies without the high risk of leveraging. Its objective is to provide long-term positive returns that are uncorrelated with the stock or bond markets. This is what Modern Portfolio Theory is supposed to be about: the non-correlation of assets. Not some sales pitch on how much you have in mid cap domestic value versus small cap international growth.