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Hedge Funds
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Mutual Funds
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Private investment vehicles
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SEC Registered investment vehicles
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May use leverage extensively
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Limited use of leverage
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May engage in short selling
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Maximum 30% of profits from short-sales
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May use derivatives
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May not use derivatives
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Large minimum investments
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Small minimum investments
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Restricted from advertising
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May freely advertise and promote
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Offered by private placement memo
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Offered by prospectus
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Liquidity varies from monthly to annually
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Daily liquidity and redemption
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Manager compensated on performance
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Manager paid a salary and bonus
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Manager invests own capital
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Manager typically does not invest own capital
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Flexibility in investment strategies
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Relatively inflexible
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Usually aim for absolute return objective
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Aim to outperform known market benchmark
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