What is the difference between a hedge fund and a mutual fund?

Question

Accepted Answer

Mutual funds are open to anyone, tightly regulated and can be sold any day. Hedge funds are private, open only to wealthy investors and institutions, can use far riskier strategies, charge more, and lock up investors' money for longer. Mutual fundHedge fund Who can investAnyoneAccredited investors and institutions RegulationRegistered under the Investment Company ActExempt from it; its adviser is usually registered StrategiesMostly long stocks and bonds, with limits on borrowing and shortingAlmost anything: shorting, leverage, derivatives FeesA yearly fee, often well under 1%A yearly fee plus a share of profits Getting money outAny business dayMonthly or quarterly, after a lock-up DisclosurePublishes its full holdings regularlyOnly its long US holdings, in its 13F The large mutual fund companies also file 13Fs, and HedgeFollow tracks them among all institutional investors.

	Mutual fund	Hedge fund
Who can invest	Anyone	Accredited investors and institutions
Regulation	Registered under the Investment Company Act	Exempt from it; its adviser is usually registered
Strategies	Mostly long stocks and bonds, with limits on borrowing and shorting	Almost anything: shorting, leverage, derivatives
Fees	A yearly fee, often well under 1%	A yearly fee plus a share of profits
Getting money out	Any business day	Monthly or quarterly, after a lock-up
Disclosure	Publishes its full holdings regularly	Only its long US holdings, in its 13F

What is the difference between a hedge fund and a mutual fund?

Related questions