Question

What are the differences between Hedge Funds and Mutual Funds? Specify the differences with respect to each of these four areas: A. Investors B. Regulation C. Fees for managers D. Risks and Investment Strategies

Answer 1

Particulars	Hedge funds	Mutual funds
A. Investors	Investors of hedge funds are HNI - High Net worth Individuals. HNI are big ticket size customers they have higher risk apatite.	Investors of mutual funds are generally range from low ticket size to medium. HNIs occupy very small market share in mutual funds.
B. Regulation	Hedge funds are less regulated as they are private in nature.	Mutual funds are for general public hence regulation is very high and structured.
C. Fees for managers	The fees of hedge funds may be 10-15 times of mutual funds.	Mutual funds charges are generally very low in comparison to hedge funds around 0.5%-2.0%
D. Risk and Investment strategies	Strategies: 1) Managed futures and global macro 2) Merger/Risk Arbitrage and Distressed Securities 3) Fixed Income Arbitrage 4) Convertible Arbitrage 5) Long/Short Equity etc..	Strategies: 1) Timing market 2) Averaging based on performance 3) Buy or Hold 4) Investing in top performing (say, top 50 or 100)