Mutual Fund, Hedge Fund and Sovereign Wealth Fund

Mutual Fund, Hedge Fund and Sovereign Wealth Fund are three major types of investment funds around the world.  Mutual Funds are open to millions of small or large individuals, institutions or any investors and organizations that have money to invest.  In a sharp contrast, the Sovereign Wealth Funds often have only one source of monetary funding, i.e., nation's foreign exchange reserve.  Hedge Funds are somewhere between these two categories, however, it generally does not deal with the small investors.

How big are these funds?

Total asset value for all the world Hedge Funds is about $2.5 trillions and Sovereign Wealth Funds are almost twice the amount, $4 trillions.  Mutual Funds still hold the lion share among all the funds, totalling around $20 trillions.  In fact, Sovereign Wealth Funds may invest in both Hedge and Mutual Funds, along with all the available common investment vehicles.  Hedge Funds may also invest in specific Mutual Funds.  However, Mutual Funds will not inversely invest in the other two types.

Where do the funds invest?

Almost anything and everything that can return a financial gain in short or long terms.  Look at the big pie of the world investments, an amazing total of $136 trillions, the common investments include bonds, stocks, CDs, FOREX, gold, etc.  Nevertheless, all three fund types may make money regardless whether these investment prices rise or fall.  The funds, especially the Hedge Funds, can heavily bet the price going down in order to hedge and profit from the fall.