Against The Grain Investing

David J. Winters could have started a hedge fund, with its fatter fees and light regulation. But after the 43-year-old left his job as chief investment officer of Franklin Mutual Advisers funds in May, he started a mutual fund shop, Wintergreen Advisers. The firm's first retail offering, Wintergreen Fund, opened on Oct. 14 and has thus far gained 1.2%. The firm would not disclose the fund's size.

A 20-year veteran of the industry, Winters felt comfortable sticking with mutual funds. And individual investors are the ones who most need innovative investments, he says. In any case, mutual funds can use many of the same strategies as hedge funds; it's just that many managers would rather ply those skills in a format where they can charge higher fees and take a cut of the profits.