Whats the difference between private equity funds and hedge funds?
Private equity often is confused with hedge funds. But the two forms of investment differ in important ways: Private equity seeks to create value over the long-term; hedge funds typically have a much shorter time horizon. Private equity funds are typically organized with 10 year lives, so they cannot be forced to sell an investment within those 10 years. Hedge funds are pools of capital that usually invest in stocks, bonds, or commodities. Typically, hedge funds do not focus on investing in private companies. Most hedge funds allow their investors to withdraw capital on relatively short notice and, as a result, private equity investments aren’t suitable. Some hedge funds entered the private equity business, but this has typically been a “side line” compared to their main stay of trading stocks, bonds and commodities. Private equity funds invest in companies with the intent of owning and operating them for several years or more. The goal is to grow the companies and strengthen their per
