NEW YORK (CNNMoney.com) - More and more fund firms are hawking mutual funds that are liquid and open to ordinary investors but that use hedge fund techniques, such as selling stocks short and using borrowed money to boost returns.

Are they worthwhile investments?

As with traditional hedge funds -- or any investment, for that matter -- the answer depends on who's managing the funds, how much they cost and how much risk you're willing to take.

Like traditional hedge funds, these mutual funds use things like short-selling, commodities and options to give investors an alternative to straight-up stock or bond funds -- the twist being that you, the average investor, can get in on the action without having to plop down the $500,000 or $1 million you'd need to get into a hedge fund.

Here's how a handful of these funds performed in 2005.

Fund: Gateway

Manager: Gateway Investment Advisers

The Gateway Fund invests in stocks and sells index call options. It's designed to give investors higher returns than fixed income investments while reducing the volatility of stock funds.

While the fund mainly invests in equities, according to its prospectus, its volatility has historically been closer to things like bonds. Its expense ratio is 0.97 percent of the fund's assets. The fund's minimum investment is $1,000.

The fund has netted returns of 4.7 percent through Dec. 9. Over a 10-year period ending Dec. 1, 2004, the fund produced returns after taxes of 4.52 percent.

Fund: Diamond Hill Focus Long/Short

Manager: Diamond Hill Investments

As its name implies, the Diamond Hill Focus Long/Short fund bets on stocks its managers like and against those seen as overvalued.

According to a Morningstar profile, the fund has generated average returns of 8 percent a year, a performance Morningstar's analysts called "better than most of its rivals, and it easily trumps its benchmark Russell 3000 Index's 1.9 percent average annual loss."

But the fund's performance has been more volatile than that of similar funds and it takes risks most mutual funds avoid, according to Morningstar. It's also pretty expensive: the fund levies a 5 percent sales charge and its expense ratio is about 1.75 percent of funds assets.

Hmm... high fees, higher than average risk, but higher than average returns? Sounds like this mutual fund is more of a hedge fund than many hedge funds these days. The fund has returned 19.12 percent this year through Dec. 9.

Fund: Hussman Strategic Growth

Manager: Hussman Funds

Portfolio manager John Hussman describes the fund as a "risk-managed growth fund." The fund invests in common stocks but uses options and futures to boost returns.

"What I try to do is always be fully invested in stocks," he said, while hedging against fluctuations in the broader market.

Hussman doesn't short stocks, nor does he borrow money to enhance returns, but in a strong market may use "leverage"-type techniques such as buying call options on individual stocks or market indices. In falling markets, he'll sell short.

The fund's expense ratio comes out to 1.15 percent of the fund's assets; the minimum investment is about $1,000.

The fund has netted returns of 4.95 percent through Dec. 9. If you'd invested since the fund's inception in July 2000, you'd have doubled your investment.

Fund: Pimco Commodity RealReturn Strategy

Manager: Pimco

While not billed as a hedge-like mutual fund, the fund gives retail investors exposure to commodity markets by investing in a basket of futures. It benefited this year in particular from the energy market.

While commodity funds are more volatile that more traditional investments, they can produce stellar returns. Some investment advisers recommend using such funds as a small part of a balanced portfolio.

Returns? 21.25 percent through Dec. 9. The fund has doubled since opening in June 2002.

While some of these funds have indeed outperformed appropriate benchmarks, some charge higher-than-average fees to cover trading costs and other expenses.

If you want to invest, do your homework. Discuss your plan with a financial adviser. Some hedge-like mutual funds only accept investments directed through financial advisers anyway.

Hussman recommends paying close attention to fees. And he warns that because they don't follow typical long-only mutual fund strategies, their returns will not always be correlated to the broader market.

While that can be a comfort when the market's sinking, "if you want a risk-managed fund to participate in every short-term rally, you're just going to get frustrated as heck," he said.

He also recommends evaluating a fund through a full market cycle to see how a fund behaves in both bull and bear markets.

Finally, Jeff Joseph, managing director of Rydex, which several weeks ago launched two hedge-like mutual funds for retail investors, recommends making sure you get the right mix of alternative investments in your portfolio.

"The idea of a 10 to 20 percent alternative, non-correlated investment in a portfolio is pretty standard," he said, adding that as the space becomes more popular, investors will have more options to choose from.

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7 star mutual funds: click here.

Stocks face rough road in 2006: more here.