Absolute-return mutual funds that seek to provide investors with positive returns whether equity markets are rising or falling, are growing in rapid numbers in today's volatile market and hoping to attract a loyal investor following.

But so far, it's largely been the fringe players, not the colossal mutual fund advisory firms, that have emerged with market-neutral, long-short, 130/30 and other funds that utilize hedging strategies to achieve positive returns, said Don Phillips, managing director at Morningstar of Chicago.

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