Sun Life Financial Inc.’s MFS Investment Management is getting into the alternative investments business.

The Boston-based firm said that the first step of this expansion is the formation of a new subsidiary whose business strategy will be to provide significant seed and expansion capital to emerging hedge fund managers.

The new subsidiary, Four Pillars Capital, Inc., will be run as a separate entity from MFS. The two will not share investment resources, although MFS will provide key operations, marketing and distribution support to Four Pillars.

The president of Four Pillars will be Thomas Knott, a 23-year veteran of the investment management business who was a co-founder in 1998 of K Capital Partners, a value-oriented hedge fund focused on European and North American investments.

Four Pillars generally will focus on finding managers who have built successful records with other organizations and are in need of seed capital to build their own firms. It also will provide expansion capital to smaller existing hedge fund managers who have successful records and are looking to scale their operations.

The firm’s focus will be on hedged strategies that do not rely on the extensive use of leverage or illiquid private securities to generate returns. “We’re looking for strategies that rely on the manager’s fundamental analytical skill to produce attractive risk-adjusted returns,” Knott said.

“The ability to align with a major organization such as MFS for operational and systems support will be an added plus for the managers receiving seed capital,” Knott noted. “Hedge fund failures are commonly the result of operational problems. MFS will provide extensive operational support in addition to state-of-the-art risk management tools to help mitigate this risk.”

“Our institutional clients are increasingly demanding alternative investments to complement long-only strategies and diversify their portfolios,” said MFS president and CEO Robert Manning.

MFS managed US$202 billion in assets as of end-June.