Hedge Funds Mutual Funds
'Absolute' return objective
Flexible investment strategies
Unconstrained by benchmark index
Lower correlation to markets
Take long and short positions
May employ leverage
Manager fees tied to performance
Usually large minimum investment size
Usually sold by Offering Memorandum only
'Relative' return objective
Limited investment strategies
Constrained by a benchmark index
Higher correlation to markets
Take long-only positions
No use of leverage
Manager fees not typically tied to performance
Small minimum investment size
Usually sold by Prospectus only