More financial firms are introducing hedge funds, as well as hedge-fund-like products, for small investors.

Goldman Sachs became the first big investment bank with a multi-manager hedge fund for retail investors, according to CNBC, when it launched a fund in May, raising $58 million within two months.

And now several other investment banks are working on hedge funds with minimum investments that might be as low as $1,000, opening the funds to a broad swath of small investors.

Declassified: ‘Financial War’ Could Wipe Out 50% of Your Wealth

Amy Bensted, head of hedge fund research at data provider Preqin, told CNBC she sees a trend of investors moving from traditional wealth managers to alternative investments and banks like Merrill Lynch and UBS considering hedge funds targeting retail investors to meet that demand.

Hedge funds with single name managers and low minimums are more common than funds-of-funds for small investors. Wada Capital Japan trust and the Venator Investment trust offer products with minimums as low as $500, CNBC reports, citing Preqin data.

Goldman's new fund comes with a 2 percent management fee but lacks the common hedge fund 20 percent performance fee and typical hedge fund restrictions against withdrawals.

Citigroup expects demand for alternative, yet liquid, investment products for retail investors to more than triple to $939 billion by 2017, CNBC reports.

Alastair Barrie, global head of hedge funds at Martin Currie, envisions a "democratization" of hedge funds.

More investors should include simple hedge funds in their portfolios, he said. "By that I mean long/short credit or long/short equity," he said. "What does that mean for the client? It means they probably sacrifice some upside return, but potentially don't get the same downdraft when there is a big market correction."

More investors approaching retirement are interested the hedge funds, Barrie told CNBC.

"When you come up to retirement, you don't want to have too much exposure to the equity markets just in case there is a big correction – that is why you are seeing increasing demand using diversified asset portfolios or multi-manager portfolios so they get less exposure to straight equities."

So-called hedged mutual funds offer hedge-fund-like tactics, such as short selling, leverage, and use of derivatives, according to The Wall Street Journal.

However, they feature greater transparency and lower fees and minimum investment requirements. Plus, they can be traded daily, unlike hedge funds.

They may use a single strategy, a range of strategies, or spread assets among several managers in a fund of funds.

Mutual fund companies as well as private equity firms like Blackstone Group and hedge fund managers like Aurora Investment Management are launching the hybrid products, according to the Journal.

Declassified: ‘Financial War’ Could Wipe Out 50% of Your Wealth