The other challenge was more practical: Ramius did not have the personnel to service those platforms, a crucial factor in providing education and maintaining contact with their distribution networks in order to arrive at an institutional solution.

The firm met this challenge in the fall of 2009 by hiring David Thill and Daniel Lehmann, who, along with Ramius director Steven Tholen, have become the core of Ramius' platform distribution effort. As well, both the firm's senior management-Cohen, Stark and Strauss-and the portfolio managers have all made presentations to groups about the firm and its products.

"That's critical," says Strauss. "You have to get them comfortable with the firm, the portfolio managers, the support mechanisms and how you service these clients."

Hedge Fund Replication Fund
Ramius' relationships with platform groups and registered investment advisors take different paths depending on investors' eligibility for a specific product. At present, the only Ramius product that goes down to the real retail market is its replication mutual fund, according to Strauss. The Ramius Dynamic Replication Fund launched in July and in February had some $137 million under management Strauss thinks the fund has broad application for retail investors because it provides daily pricing and daily liquidity. Also, it provides a stream of returns that have very low correlation to stock and bond prices. And by the nature of replication, it avoids the headline risk associated with manager selection.

"In general, replication products aim to offer liquid access to 'hedge fund betas' typically using certain quantitative methods to replicate the returns of a passive hedge fund index," Strauss explains.

Ramius focuses on replicating the beta and beta timing components of the firm's custom, actively managed hedge fund composite ("RCAM Composite,") he says. "Unlike using a passive index, we can incorporate into the RCAM Composite the Ramius team's full breadth and capital markets expertise, including a forward-looking strategy allocation framework, screening of potential RCAM Composite constituents and an integrated risk management framework."

All of these inputs go into a portfolio construction methodology that brings these views together into an optimized portfolio. "We believe the RCAM Composite is a better representation of hedge fund returns as an asset class than the passive hedge fund indices utilized in many other replication products," he says.

Another area Ramius finds attractive to retail investors-and increasingly to institutions-is managed futures. Managed futures provide diversification, says Strauss. The character of the income streams coming out of a portfolio of managed futures should complement a well-constructed hedge fund portfolio. Ramius has a managed futures platform made up of managed accounts with full transparency. Strauss says the firm is still working to make this fully available to retail investors.

Offering Solutions
Ramius' replication mutual fund emerged from the Alternatives Solutions business, which used to be known as the Fund of Funds Group. This segment had $3 billion under management as of October 1.

Ramius Alternatives Solutions works with large institutions and family offices to help them solve their hedge fund problems. "We engage with large clients that may need to start with as basic a concept as, what is their hedge fund policy? Also, how does one's hedge fund portfolio fit within the context of a client's broader asset allocation and their investment objectives?" Strauss says.