Alternative mutual funds present opportunities for hedge fund managers to diversify their product offerings and to attract retail investors.  At the same time, retail investors are clamoring for opportunities to invest with the most talented investment professionals, many of which are attracted to working with hedge fund firms.  However, hedge fund managers that launch alternative mutual funds face significant business challenges and regulatory concerns unique to the registered fund world.  This two-part article series is designed to familiarize hedge fund managers with alternative mutual funds and to help them determine whether it is advisable to launch such funds.  This second article details specific steps necessary to launch an alternative mutual fund; costs and fees associated with launching and operating an alternative mutual fund; distribution of alternative mutual funds; investment restrictions applicable to alternative mutual funds; and a key conflict of interest hedge fund managers face when operating alternative mutual funds and traditional hedge funds side-by-side.  The first installment discussed the structure of alternative mutual funds; the investment strategies typically employed by alternative mutual funds; why hedge fund managers consider launching alternative mutual funds; some drawbacks of launching alternative mutual funds; and the various ways in which hedge fund managers can participate in the alternative mutual fund business.  See “How Can Hedge Fund Managers Organize and Operate Alternative Mutual Funds to Access Retail Capital? (Part One of Two),” Hedge Fund Law Report, Vol. 6, No. 5 (Feb. 1, 2013).