Money management companies that advise mutual funds are entering the hedge fund business to increase profitability, reach affluent investors and to retain portfolio managers who might otherwise leave their firms.

Companies are making forays into the hedge fund business despite the negative publicity which hedge funds or limited partnerships -- as some advisers prefer to call hedge funds -- have received as a result of the near failure of Long-Term Capital Management LP. Wall Street firms bailed out the Greenwich, Conn. hedge fund in September when $4 billion in highly leveraged investments began to unravel.

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