The primary difference between a Special Purposes Vehicle ("SPV") and an investment fund is the activity profile.
SPV:
With SPVs, these tend to be used for a principal purpose (for mergers & acquisitions or as part of a deal-by-deal investment, as a joint venture vehicle between two or more multinational companies, as a holding company for illiquid assets or as part of a Family Office structure). This means that the SPV is relatively passive.
Private Investment Fund:
Whereas, in the case of an investment fund, the Investment Manager will, in accordance with the offering documentation, invest and trade on an active basis.
Fund Managers and Sponsors should keep the anticipated activity in mind when deciding whether to utilise a SPV as opposed to a Fund.