Difference between Hedge Funds and Mutual Funds
Basis |
Hedge Funds |
Mutual Funds |
---|---|---|
Meaning | A hedge fund is a portfolio of investments in which a small group of eligible rich investors pool their money to purchase assets. | Mutual funds are trusts in which the resources of multiple investors are pooled together to purchase a diversified basket of securities at a reasonable cost. |
Return | Return is absolute. | Return is relative. |
Management | It is managed aggressively. | Comparatively managed less aggressively. |
Owners | It has few owners. | It has thousands of owners. |
Investor type | Pension funds, endowment funds, and high-net-worth individuals are basic investors of hedge funds. | Retail investors are the investor of mutual funds. |
Regulation | There are less regulations. | It is strictly regulated by SEBI. |
Fees | The fund manager charges a fee that is based on the profit earned by funds. | It is totally based on the percentage of assets managed. |
Transparency | Information is provided to investors only. | Annual reports are published and semi-annual disclosure of the performance of assets. |
Difference between Hedge Funds and Mutual Funds
Hedge Funds and Mutual Funds are two instruments through which Investment can be made in various instruments available in the market. Hedge Funds are basically private investment portfolios specifically used by the richer class whereas Mutual Funds are more associated with regular investors having one common objective.
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