Here's an in-depth look at hedge fund conversion processes: upsides, downsides and tax implications. : Fueled by an investor appetite for liquid alternative investment strategies, hedge fund conversions have been a growing trend over the last few years. With growing concerns about hedge fund returns and structure, interest in hedge fund conversions has spiked. These funds, typically offered in the form of a mutual fund, provide entree to a proven strategy and management team that most investors wouldn't otherwise have access to. But, just how are these funds converted? And what are the benefits and risks of these products?