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Understanding The Basic Difference Between Mutual Funds And Hedge Funds Providing a generalized definition for a hedge fund is really difficult and was initially designed for selling short of the stock market. These funds were primarily used for the purpose of providing a hedge against the declines of a stock market. But presently the term broadly indicates to almost all types of private investment partnerships and now thousands of hedge funds are having thriving business from all over the world. Investors do start a hedge fund for making money by investing in almost all sorts of investment options and strategies and no doubt most of these strategies are a lot more aggressive than strategies those are adopted by mutual fund investments. If you want to know how to start your own hedge fund the first thing you are required to understand is that these are actually private investment funds and it is the general partner who is responsible for choosing different areas of investment. He is also responsible for handling all trading activities as well as everyday administrative operation of the fund. Along with a small management fee the general manager is also entitled to a large incentive bonus whenever some high return is earned. There are also some basic differences between a hedge fund and a mutual fund and before you get into how to start your own hedge fund, understanding these differences is really crucial. For more information on hedge funds you can visit Riveleslawgroup.com.