Hedge Funds and Mutual Funds are some of the many pooled investment products with the aim of achieving higher returns overtime on the investments. The reasons they are preferred and popular source of investments because they are managed by Professional Fund Managers supported by efficient financial analysts before taking any investment decisions. These fund managers have an average of 20 years of experience in the industry.
Although both of them are the pooled investment products, the difference lies in the implementation, processes, strategies, and regulatory requirements. Like any other investment product, the investors invest monies in these funds with the goal of achieving a capital gain.
As the name suggests, Mutual funds include the collection of funds invested by many investors with the common goal of increasing returns. While Hedge Funds or Hedging implies proving protection and safeguarding against risks and provide higher yields. Traditionally, HFs perform better than MFs.
HFs are also highly risky investments good for HNIs whereas MFs are a safe haven for the general public.
It is with the above information that we can clearly differentiate both and make informed decisions.