Even before the fund scandal broke, a number of fund managers in recent years have left Janus and Invesco for hedge funds, attracted by their freer investment styles and bigger payout, Rocky Mountain News reports.

"A lot of people say the attractiveness is the compensation structure, and sure, certainly everyone in this business wants to make a lot of money," said Trent May, who left Invesco two years ago to start hedge fund company Deer Creek Capital. But even more important, May said, is the ability that hedge funds give him to manage money "in the truest sense."

Others who have jumped ship from mutual funds into hedge funds include Jerry Paul, also formerly with Invesco, and Sandy Rifenacht, formerly with Janus. All three told Rocky Mountain News how they like to use a wide variety of investment styles, including shorting and merger arbitrage.

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