Despite the fiduciary duty that managers have to manage a fund in the best interests of that fund’s investors, as well as requirements under the Investment Company Act of 1940 that joint enterprises involving a mutual fund and certain affiliates be fair to the mutual fund, numerous potential conflicts nevertheless arise out of the simultaneous management of hedge funds and alternative mutual funds (or liquid alternative funds).  See “SEC and FSA Impose Heavy Fines on Investment Manager for Failing to Address Conflicts of Interest Associated with Side by Side Management of a Registered Fund and a Hedge Fund,” Hedge Fund Law Report, Vol. 5, No. 21 (May 24, 2012).  Along with those potential conflicts comes the corresponding risk that the manager or hedge fund investors can benefit at the expense of the mutual fund investors.  Investment allocation, operational, valuation and other conflicts all arise out of simultaneous management, and managers operating both hedge funds and mutual funds must try to mitigate such conflicts wherever possible.  This article, the third in a three-part series, discusses ways to mitigate conflicts arising out of simultaneous management of hedge and alternative mutual funds.  The first article provided an overall assessment of conflicts of interest in simultaneous management; outlined the conflicts inherent in allocation of investments between a hedge fund and an alternative mutual fund following the same strategy; and discussed leverage limits, liquidity issues and diversification requirements applicable to alternative mutual funds.  The second article detailed additional conflicts arising out of simultaneous management of hedge funds and alternative mutual funds, including operational conflicts, conflicts of fee-related investment decisions, cross trades, soft dollar allocations, valuation concerns, reporting conflicts and marketing conflicts.  See also “The First Steps to Take When Joining the Rush to Offer Registered Liquid Alternative Funds,” Hedge Fund Law Report, Vol. 7, No. 42 (Nov. 6, 2014).