Advisors say they are looking closer at allocating some of their clients’ assets to hedge funds now that it looks like the Securities and Exchange Commission will require managers of $25 million or more in hedge fund assets to register, according to Fund Marketing Alert. The proposal, passed last week, now has to undergo a 60-day comment period before it goes up for a final vote. "This will cause advisors to re-evaluate these products," said Jeff Joseph, managing director at Rydex Investments. "It eliminates one of the barriers."

Harold Evensky, chairman at Coral Gables, Fla.-based Evensky, Brown & Katz, said his firm is always looking at hedge funds, but this rule makes adding them to clients’ portfolios more of a reality. "We would be more inclined to look more carefully at them and more inclined to use them," he said. The firm wants to add more of these vehicles to complement the Rydex SphinX fund, which it recently added (www.fundmarketing.com, 5/3).

Dennis Carpenter, president of Grapevine, Texas-based International Wealth Management, has received questions from clients about investing in hedge funds. Now he feels he is closer to recommending them. "It peels away a level of mystery for the end user and gives you a higher level of comfort," he said. George Strickland, president of Houston-based Financial Synergies Advisory, said his firm had "a glacier’s pace of getting into hedge funds," but now it is a bigger priority. "I think [the SEC rule is] a step that will give people some assurances," he said.