Credit Suisse Group AG (NYSE:CS) launched a new attack on standard financial practice today with a new mutual fund. The new instrument, called the Credit Suisse Liquid Alternative Fund, will mimic a hedge fund in its strategy but will operate like a mutual fund welcoming all comers. The fund marks a new round in a game Credit Suisse has long been playing. The firm, like many financial institutions, has been expanding into new types of instruments, some of them more risky than others.

The bank’s new fund will, according to a researcher for the company Jordan Drachman, “offer the potential to improve diversification and reduce correlation and portfolio volatility” of hedge funds while avoiding the constraints placed on access to capital by hedge funds and the “tax resrictive, lengthy and expensive” process for offshore investing. The fund will offfer daily liquidity and will be available in two main classes of shares one catering to individuals, at a minimum of $2500, and the second to IRAs, at a minimum of $500.

Credit Suisse is no stranger to financial innovation, and it is no stranger to trouble resulting from that innovation either. It’s volatility tracker, the TVIX (NYSEARCA:TVIX), which is supposed to double the daily returns of the VIX volatility tracker has been the subject of some scrutiny lately as the instrument returned odd results in recent months. The Exchange Traded Note’s huge drop in value in March raised the SEC and they began conducting a preliminary investigation into the instrument. It lost $700 million in the sell off. That sum at the very least should cause greater perseverance when looking at these new types of financial instrument.

The SEC has looked into more than just Credit Suisse’s latest endeavors. The regulator is looking at ETNs and ETFs across the board in an investigation that began as early as last September. The SEC has been particularly inquiring into the effect the funds might have on market volatility. ETFs that are highly leveraged have become particularly dangerous in recent years amplifying the effects of money played in a certain direction.

This leads us back to mutual funds, a common and well worn instrument but one that is changing with the times. Mutual funds increasing their leverage and a new type of fund has brought even more resonation in the power of the funds. The 130/30 funds and leveraged funds are changing the way these instruments work. How long will it be before Credit Suisse attempts a hybrid between the two? The new instruments are an inevitable part of financial evolution. For an ordinary investor though they are as risky as any untested stock or bond.