Private equity funds and hedge funds are alternative asset classes that are gaining importance. They have similarities and differences, and their regulation is a topic of debate. Recent events in the hedge fund industry have sparked public discussion. The distinction between the two types of funds is often unclear, leading to mistrust. The paper aims to discuss arguments for and against regulation, examine links between the asset classes, identify differences, and create criteria for clear distinction. The goal is to improve understanding and perception of private equity funds compared to hedge funds.