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On the other hand, mutual funds may appeal to those who believe in a specific fund manager’s strategy but come with higher fees and the potential for underperformance. Hedge funds, characterized by their aggressive strategies and high costs, are usually not appropriate for average investors and are targeted more towards accredited investors looking for higher-risk investments.
Finally, understanding these different types of investment funds will empower you to make informed decisions that align with your financial goals. Armed with this knowledge, you're better equipped to navigate the investing landscape.