Alternative mutual funds are making their way into the market via mutual fund firms, hedge funds, private equity shops and now banks.

Specifically, Goldman Sachs Asset Management and Morgan Stanley this month unveiled their maiden respective alternative mutual funds: Goldman Sachs Multi-Manager Alternatives Fund(GMAMX) and the AIP Dynamic Alternative Strategies Fund (DACSX).

The AIP Fund offers investors exposure to long/short, arbitrage, global macro and market neutral strategies, according to the fund's marketing material via other alternative mutual funds and its own hedge fund replication strategy. The fund's annual operating expense ranges from 190 basis points to 309 bps.

"The AIP Dynamic Alternative Strategies Fund offers a sophisticated, one-step means of accessing a broad range of alternative strategies that may complement traditional equity and fixed income investments," said Ryan Meredith, co-portfolio manager of the fund.

"The fund utilizes AIP's innovative, proprietary hedge fund replication strategy that seeks to generate returns based on several fundamental underlying hedge fund strategies. The fund also provides exposure to additional non-traditional return sources and will be actively managed in an effort to capture new opportunities and to manage risk," he said.

Meredith added that the alternatives mutual fund space is a promising one that the firm believes will experience growth over the coming years.

Indeed, industry tallies seem to back Meredith's sentiments and his job security. According toMorningstar, assets in the alternative mutual fund asset class have risen in the past five years from $40 billion in April 2008 to $104 billion in April 2013. And Citi Prime Finance said in its fourth annual survey of hedge fund industry trends that global demand for retail alternative products will reach $939 billion by 2017.

Not to be left behind, Goldman's latest fund offers a more direct play on alternatives. The fund will bet on a roster of hedge fund managers who employ a wide range of strategies, including equity long-short, dynamic equity, event-driven and credit, relative value, tactical-trading, and opportunistic fixed income strategies.

The fund will employ Ares Capital Management, Brigade Capital Management, GAM International Management Limited, Karsch Capital Management and Lateef Investment Management as sub-advisors. Its annual fund operating expenses run the gamut of 215 basis points for Institutional shares to 330 bps for Class C shares.

"We've seen the market evolve to utilize alternatives in retail portfolios so over the last several quarters we've been in the works developing this product," said James McNamara, president of Goldman Sachs Mutual Funds.

However, hedge funds haven't performed up to par versus the S&P 500 Index. For example, over the past five years, the average hedge fund, as measured by the HFRX Global Hedge Fund Index, is down 9% versus the S&P 500's gain of 21%. This year is more of the same. Hedge funds are up just over 5%; the market index, 14%. According to the same index, hedge funds returned 3.5% in 2012 versus a 16% gain posted by the S&P 500 Index.

But Goldman's executives remain undeterred. "When you look at the performance of alternative investments over a period of time, you'll find quite consistent outperformance amongst the top performing managers," said Chris Kojima, head of Goldman's Alternative Investments & Manager Selection group.

"There can be great dispersion of performance between the strongest and weakest managers, so expertise in manager selection and risk management is essential, especially when investing in alternatives. Our investment solutions are dynamic, changing over time to reflect our views on managers and the broader macro-economic environment. In our multi-manager fund, we have these initial five managers, but there will be more over time."

Jason Gottlieb, portfolio manager of the fund, added that some of his expectations for the fund include volatility around two-thirds of the equity market and beta that will be 0.5 of the equity market.

According to Amy LaFrance, Director of Mutual Fund Research for FRC, a unit of Strategic Insight, the goal of many alternative providers in the '40 act space has been the "democratization" of alternatives. "If banks continue to enter this space, it would propel the availability of alts to retail investors and may re-ignite interest in the opportunity that lies behind 'the brick and mortar,'" she said.

Robert Martorana, senior research analyst at FRC and an RIA, offered that investors unaccustomed to alts may find a product offering one-stop shopping and access to a broad range of alternatives unique. "This could make the sales process easier, since the bank can sell clients on the concept of alts, rather than on the talents and track record of a single strategy," he said.

And Alan Hess, a research associate at FRC, added that the Goldman Sachs Multi-Manager Alternatives is a sub-advised fund, which points to one of the approaches that can work for banks and other asset managers. "As they may not have in-house expertise, they can sub-advise to expert sub-advisers to get access to any number of alternative strategies," he said.

LaFrance noted that J.P. Morgan made a large push into the advisor market during 2008 and quickly rose to one of the top advisor providers on the strength of its extended value added programs and services they were making available to financial advisors at a time when many other firms backed away (i.e. quarterly investor/advisor conference calls, monthly PM calls for advisors, thought leadership pieces made available for quick download).

"As advisors have been a significant force in driving the demand for alternative investments, it is not surprising to see J.P. Morgan play a part in the alternatives space."