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

Prepwise AnswersCategory: Finance CareersWhat is the difference between a mutual fund and a hedge fund?
Greston Wise Staff asked 7 years ago
1 Answers
Career Dev Staff Staff answered 7 years ago

Both are managed portfolios. Meaning a manager (or managers) picks securities that they think will perform well and groups them into a single portfolio. Hedge funds are managed more aggressively and have the ability to short sell stocks. This typically increases the leverage and the risk of the fund. Hedge funds are only available to a specific group of investors with high net worth while mutual funds are available to everyone.