Hedge-Like Mutual Fund

Mutual funds are a tightly regulated industry. They get sold to the general public, regular work-a-day folks, so the government keeps a relatively tight leash on what they can do.

By comparison, hedge funds are like the Wild West. Managers can do whatever they want. Weird derivative positions, like arbitraging Polish weather futures with ruble-denominated energy bonds...or whatever they think they need to do to make money. Hedge fund managers can follow their bliss.

Because their investors are assumed to be rich and sophisticated, hedge funds don't have a lot of restrictions on their investing styles. The added rules that mutual funds have to follow are meant to make them safer. Theoretically, a vanilla mutual fund won't blow up if those Polish weather futures go south.

But the restrictions cap the upside, so some work-a-day investors seek out mutual funds that operate closer to hedge funds. Hedge-like mutual funds. The regulations still apply though, so it can't reach Wild West status. It's more like a Wild West show at Frontier Land. But still.