WASHINGTON – Federal regulators are scrutinizing a type of mutual fund that's potentially riskier than conventional funds and is growing in popularity, prompting concerns over possible harm to ordinary investors.
Continue Reading Below
The Securities and Exchange Commission has disclosed that it's conducting a "national sweep exam" of so-called alternative mutual funds, focusing in a first phase on 15 to 20 groups of funds. The SEC official who heads the agency's investment fund division says the review looks at the funds' ready assets and oversight of them by fund boards.
The alternative funds use investment strategies similar to those employed by hedge funds, which can include commodities and complex derivatives as well as ordinary stocks.