Mutual Funds vs. Hedge Funds -- the differences:
Mutual funds are operated by investment companies, regulated by the SEC, the IRS and other agencies and entities.
Money for the funds is raised from the public. Usually, very little of the investment company's own money is actually invested.
Investors share equally in gains and losses proportionate to their investment.
Mutual Funds offer investors professional management and usually offer investment diversification.
Mutual funds' choices of investments are more limited and restricted than those of hedge funds.
Domestic Mutual Funds have disclosure requirements and are otherwise heavily regulated. These regulations restrict the Fund from purchasing many types of derivative instruments, leveraging, short-selling, real estate and commodities.