As hedge fund and mutual fund managers seek new sources of capital, and retail investors begin to understand the value that alternative investment strategies can add to an investment portfolio, funds registered under the Investment Company Act of 1940 (’40 Act) that pursue “alternative” strategies are growing in popularity.  See “BNY Panels Discuss the Supply Of, and Demand For, Alternative Mutual Funds,” Hedge Fund Law Report, Vol. 7, No. 21 (Jun. 2, 2014).  At a recent panel, K&L Gates partners and executives from Cordium discussed the benefits and limitations of alternative mutual funds, discussed ways to enter the alternative mutual fund market and provided a thorough overview of some of the investment and operational restrictions and requirements imposed on alternative mutual funds.  This article is the first in a two-part series covering the program.  This article addresses: the potential advantages of alternative mutual funds over hedge funds; mutual fund laws and rules that are typically foreign to hedge fund managers; hedge fund strategies that “fit” within the mutual fund model; and the pros and cons of three structures for entry by hedge fund managers into the alternative mutual fund business.  The next article in the series will discuss leverage limits, custody, prime brokers and tri-party agreements, valuation and liquidity, portfolio management, CFTC jurisdiction and applicable compliance rules.