Thinking about starting up a hedge fund? While the draw of wealthy investors handing over megabucks, returns that don't depend on the stock market and the allure of beefy performance incentive fees are certainly compelling reasons to dive into the market, operationally, hedge funds and mutual funds are worlds apart.

While mutual funds must be registered with the Securities and Exchange Commission as investment companies, traditional hedge funds are not SEC-registered and are usually structured as limited partnerships, limited liability companies or business trusts. Each carries its own unique characteristics and tax structure.

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