UPDATE 2-U.S. SEC to examine alternative mutual funds -WSJ

Tue Aug 12, 2014 8:22pm EDT

(Adds AQR Capital Management declined to comment)

Aug 12 (Reuters) - The U.S. Securities and Exchange Commission has begun a broad examination of alternative mutual funds, the Wall Street Journal reported, citing people familiar with the matter.

The so-called funds "sweep" includes examinations of large investment companies such as BlackRock Inc and AQR Capital Management LLC, and smaller firms that previously did not offer mutual funds, the Journal said. (on.wsj.com/1ppVgBx)

BlackRock has launched seven alternative mutual funds aimed at penetrating the retail alternatives market.

Alternative mutual funds typically employ investment strategies that imitate those of hedge funds, such as investing in private debt or shorting assets, and command higher fees.

Traditional mutual funds, in comparison, generally invest in more standard asset classes such as stocks and bonds for the long haul.

Reuters reported in July that a surge of investment in alternative mutual funds had caught the attention of the regulators and the SEC would launch examinations of these funds.

The SEC also expects alternative funds to follow a regulation that generally requires mutual funds to send payments to investors within seven days after they redeem shares.

BlackRock and AQR Capital Management declined to comment on the news. (Reporting by Neha Dimri in Bangalore; Editing by Feroze Jamal and Jan Paschal)

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