From Examiner.com What is a hedge fund and how is it different from a mutual fund?:
"Hedgefunds, unlike mutual funds, employ a wider array of ivesting techniques, which are considered more aggressive. For example, hedge funds often use leverage to amplify their returns (or losses if things go wrong).
The other key difference between hedge funds and mutual funds is the amount of regulation involved. Hedge funds are relatively unregulated because investors in hedge funds are assumed to be more sophisticated investors, who can both afford and understand the potential losses. In fact, U.S. laws require that the majority of investors in the fund are accredited."