One hedge fund manager is looking to make the leap into mutual funds by way of a market neutral offering to be launched sometime in early 2012. The MFWire.com has learned that New York-based HAGIN Investment Management, a quant shop, is prepping a market neutral fund to be marketed to fee-based advisors next year.

According to a regulatory filing, the HAGIN Keystone Market Neutral Fund will be listed under the Cottonwood series trust moniker and sport a management fee of 125 basis points.

The fund will bet on large cap stocks using a fundamentally-based quant strategy, according to HAGIN's CEO Patrick Morris, who is optimistic that he can find an audience for his new offering among fee-based advisors.

"There is a mjor shift in how to market a hedge fund by getting away from the lack of transparency," he told the MFWire.com. "Mutual funds are a package, a structure, and provide collateral value on a balance sheet."

"I don't want to compete against the biggest hedge funds or mutual funds," Morris added. "I want to to go where I can stand alone. People like the concept of a market neutral fund but don't like the LP structure."

Morris doesn't see the fund's stock selection model as a deterrent to advisors who are already "sophisticated people making aset allocations for their clients". And in contrast to certain exchange-traded funds that are currently getting the cold shoulder from the Securities and Exchange Commission, Morris said that the regulatory agency is "pretty workable so you can apply and work with them on these products."

The fund's administrator is Cortland Fund Services and its legal provider is John H. Lively & Associates, Inc. 

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