Two hedged mutual funds that we have used at The MDE Group with some success include the TFS Market Neutral Fund (TFSMX) and the JPMorgan Strategic Income Opportunity Fund (JSOSX).

FORBES: Making Volatility Work For You

For example, the SEC alleges that ThinkStrategy reported a 2008 return of 22.6% for its Capital Fund-A, a long-short market neutral hedge fund, when the actual performance was -77.9%.

FORBES: SEC Alleges Deceptive Conduct Against Fund Of Hedge Funds Manager

Described in typical industry gobbledygook as a "multistrategy, market-neutral arbitrage" fund, SRI eked out a net 0.07% return its first six months.

FORBES: Sid Bass tries to hook investors with a no-sin fund.