Over the past few years, the total number of investment options available to investors has increased significantly. This is reflected in the overall increase in the number of private equity funds, hedge funds and mutual funds. For example, the total number of private equity transactions completed during 1970 was 12 transactions representing $13 million in investment capital. In 2007, this number of transactions increased by 2,247 and represented a total of $70 billion in investment capital. (Shapiro, 2008) This is important because it highlights the overall change in the way investors can make money, in an increasingly globalized economy. As a result, the prudent investor has a detailed understanding of the different investment vehicles available to him. Where, knowing how each works can help improve the overall returns of the investment strategy used. Achieving this goal requires careful understanding between different asset classes: private equity funds, hedge funds and mutual funds. Where, by looking at how each works, when to use them most effectively and concrete examples of the different investments; will provide the best information on the valuation differences between the three. Together, these different elements will highlight how the three investment vehicles are increasingly being used by a number of different investors across the world. Private Equity Fund A private equity fund is where a group of investors pool their money to buy companies that have been facing enormous financial difficulties. Where, the private equity firm will look to buy the company, then, the ...... middle of ...... paper funds. (2010). Retrieved April 6, 2010, from Investopedia website: http://www.investopedia.com/university/mutualfunds/mutualfunds.aspPrivate Equity Fund. (2010). Retrieved April 6, 2010, from Investword website: http://www.investorwords.com/6892/private_equity_fund.htmlProducts and Services. (2010). Retrieved April 6, 2010, from Pimco website: http://www.pimco.com/LeftNav/ProductsServices/default.htmShapiro, R. (2008). The role of private equity in US financial markets. Retrieved April 5, 2010, from the Private Equity Council website: http://www.privateequitycouncil.org/wordpress/wp-content/uploads/pec-study-role-of-pe-in-capital-markets-10-16 -08 -final.pdfThomas, M. (2006). Main differences between hedge funds and private equity funds. Retrieved April 5, 2010, from All Business website: http://www.allbusiness.com/personal-finance/investing/4069648-1.html