As Bandon Capital Management nears the first anniversary of its long-short fixed income mutual fund it is closing in on a round of strategic capital.

The firm plans to use the monies to accelerate the expansion of infrastructure including distribution, marketing and product development, the MFWire has learned.

Mike Miller, managing director, told the MFWire that the firm has had conversation with over 30 shops spanning the traditional and alternative investment management industry including hedge funds, mutual funds and institutional asset management shops. "2008 scared the hell out of hedge funds so they're leery of marketing and sales," said Miller. "A more diversified model will benefit them."

"This is a fast-growing high margin space for mutual funds but their challenge is that their sales people won't necessarily understand alternatives. This is a way for them to participate in the space without modifying their flagship franchise."

Miller added that final negotiations are underway and the firm hopes to have an agreement in place by the New Year whereby its new partner will take a minority interest in the firm.

Miller said the firm will scour large family offices and/or consulting shops for an "alternatives advocate" who can speak to the market in terms of why it needs alternative products and how they can be used effectively. He said the firm will also look to hire a marketer and a chief operating officer.

The Bandon Isolated Alpha Fixed Income Fund is down 0.80 percent year-to-date and holds some $26 million in assets. 

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