Explanation

Immediate access to withdrawals from the fund (B) is a key differentiator:

Mutual Funds:

• Typically offer daily liquidity
• Investors can redeem shares at the end of each trading day at the current NAV
• No lock-up periods

Hedge Funds:

• Often have lock-up periods (typically 1-3 years)
• May have redemption notice periods (30-90 days)
• Limited liquidity compared to mutual funds

Why other options are not key differentiators:

• Professional asset management (A): Both mutual funds and hedge funds employ professional managers
• Charging fees (C): Both charge management fees, though hedge funds typically have higher fees (2 and 20 structure)
• Easy diversification (D): Both provide diversification benefits to investors