The U.S. Securities and Exchange Commission is reviewing whether certain alternative mutual funds that mimic riskier hedge-fund strategies are complying with leverage and liquidity rules.

The SEC plans to test around 25 of the funds over the next several months, Jane Jarcho, an associate director in the SEC’s examination program, said yesterday in an interview.

The exams will shed light on how mutual funds are trying to generate yield and how much risk they are taking, Jarcho said. The SEC will also seek to determine whether boards are engaged in appropriate oversight, she said.

“A lot of the managers brought in to run these funds come from the hedge-fund world where they weren’t used to these regulations,” Jarcho said. “Some boards of mutual funds don’t have a lot of experience with alternative-investment strategies.”

Alternative mutual funds typically invest beyond traditional stocks and bonds into asset classes like real estate and commodities, or may employ hedging techniques like short selling. They’ve jumped in popularity since the 2008 financial crisis as investors seek better returns.

The funds are among the fastest-growing segments of the $15 trillion industry. Assets in alternative mutual funds rose 9 percent to $285 billion in the first quarter of 2014, Morningstar data show. Three-fourths of the 80 non-traditional bond funds and more than half of 435 other alternative funds were created since 2008, the research firm’s data show.

Investment Groundswell

Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s biggest money manager, has called investment in nontraditional bond strategies a “groundswell.”

“I think this will accelerate,” Fink said on an April 17 conference call.

The BlackRock Strategic Income Opportunities Portfolio drew $2.7 billion in the first quarter. The fund had total assets of more than $11 billion at the end of 2013.

The SEC will look at four types of alternative mutual funds, Jarcho said: Non-traditional bond funds, which make up about half of the total assets in the segment; long-short equity funds; multi-alternative funds and market-neutral funds.

Non-traditional bond funds invest in a wide variety of debt or have a strategy that aims to avoid losses, according to Morningstar. Multi-alternative funds take long and short positions in equity and debt, trade futures or use convertible arbitrage, the research firm said. Market-neutral funds aim to match long and short portfolios.

The SEC’s exams will run for about six months, Jarcho said. A second round of examinations could be needed, she said.

Funds Regulated

Mutual funds are regulated by the SEC under the Investment Company Act of 1940, which includes disclosure requirements and empowers boards to act independently of fund managers to protect investors.

The fund industry is facing scrutiny by the Financial Stability Oversight Council, a body created by the 2010 Dodd- Frank Act and which includes Mary Jo White, the SEC chair.

The FSOC is examining whether it should designate some of the largest asset managers as systemically important, thus subjecting them to direct regulation by the Federal Reserve. Fund companies have objected, saying there is no basis for the designation and urging the SEC to address any threats with regulations that target risky practices across the asset- management industry.