HedgeWorld.com is reporting that CIBC World Markets is bringing hedge funds to the American masses with a new fund carrying just a minimum investment of only US$25,000.

The new fund is described as a hybrid of hedge funds and mutual funds, to be called the Advantage Advisers Multi-Sector Fund I. The closed-end fund combines certain mutual fund features — such as SEC registration, sales loads and trailing commissions — with hedge fund features such as leverage, looser investment restrictions and incentive fees. The fund will not trade on an exchange, as many closed-end funds do.

The fund manager, Advantage Advisers LLC, recently filed registration documents with the U.S. Securities and Exchange Commission. It was formed to manage the fund and is owned by CIBC World Markets.

According to the SEC filing, the fund will be restricted to investors with a net worth of US$1.5 million, and will carry a maximum sales load of 5%. The annual management fee is 1.5% of assets, and the fund also pays a 20% incentive fee. Brokers and advisors who sell the fund will be paid 0.25% annual trailing fee.

The fund is similar to hedge funds in that redemptions are allowed quarterly at the discretion of the fund manager, when it will make a market in 5% to 25% of outstanding shares. The fund can also use derivatives, swaps forwards and leverage.

The fund will be managed by three sub-advisors. KBW Asset Management Inc., which is owned by Keefe Bruyette & Woods Inc., will manage a financial services sector portfolio. Kilkenny Capital Management LLC, Chicago will manage a health care and biotechnology portfolio. CIBC World Markets Asset Management will manage a technology portfolio. All three firms will manage separate accounts specifically created for the fund.