Whitebox Launches Mutual Funds for Retail Investors

The two new mutual funds-one of which is currently available for investment and another that's set to launch sometime this quarter-mark the hedge fund managers' first products available to individual investors.

Whitebox Advisors, LLC, a Minneapolis-based hedge fund manager, is making its first foray into products that are available to retail investors through the launch of two alternative mutual funds.

The firm's Whitebox Tactical Opportunities Fund launched last month and is currently available for investment. Whitebox said that the new fund utilizes the quantitative and qualitative tools that the firm's professionals use daily to identify and exploit mispricings and dislocations in the market.

The second new fund, Whitebox Enhanced Convertible Fund, is expected to open to the public sometime during this quarter. According to Whitebox, the fund will invest in convertible securities that may be overlooked by the hedge fund because they pose difficulties for arbitrage but are attractive for a mutual fund investment.

“Whitebox is excited to let individual investors capitalize on alternative strategies to which they might not otherwise have access,” CEO Andrew Redleaf said in a statement.”With Whitebox Mutual Funds, our firm will apply our leading expertise in idea-driven alternative asset management to products available with daily liquidity, regulatory oversight, and ease of investing, to retail investors.”

Founded in 2000, Whitebox currently manages more than $2.3 billion and employs 65 professionals, according to its Web site. The firm won't hire a new team to manage its mutual funds; rather, Whitebox said that the new funds will allow individual investors to benefit from the expertise of its existing hedge fund managers.

Mark Strefling, president of Whitebox Mutual Funds, on Thursday said that alternative mutual funds managed by skilled and experienced hedge fund managers are in great demand. “By responding with a high-quality alternative mutual fund product, we diversify our traditional hedge fund business and expand the number and scope of relationships with the firm,” he said.

The firm also launched a new Web site that contains additional information about the mutual funds.

Last year, Whitebox launched a “research portal” in an effort to curate ideas on sound investment practices. It then announced a research contest through which it is offering a $25,000 prize to the author of the research paper that it determines could most significantly impact the “art and science of investment.” Submissions are being accepted through January 15, and the winner will be announced sometime this spring.