The difference is that the fund manager has broader discretion to invest in a wider variety of financial products other than just stocks and bonds.
At its most basic, a hedge fund is a partnership between a professional fund manager and investors. The manager and investors pool money into a fund, using different strategies to grow the fund.
While there are hundreds of strategies employed by hedge funds, most can be grouped into four main categories: – Global macro – Directional – Event-driven – Relative value
Hedge funds implementing a global macro strategy look at the big picture economic and political trends worldwide and attempt to capitalize on these large-scale ideas.
A directional strategy hedge fund uses market trends and directional market movements to identify equities or other securities.