Private Equity vs Hedge Funds
While there are no strict definitions of a private equity firm and a hedge fund, some distinct differences separate the two types of firms.
Private equity firms and hedge funds are similar in that both invest from a leveraged pool of capital normally contributed by limited partners; both compensate the management team based on a percentage of profits (typically 20%) as well as charge a fee on assets under management (typically 2%); and both are lightly regulated (as of this writing).