Hedge fund

A hedge fund is an investment fund of pooled capital that seeks returns for investors. Investment in hedge funds is typically restricted to select individuals, i.e. those with enough capital to meet some threshold.

Hedge funds differ from mutual funds primarily by 1) investment strategy, and 2) access. While both types of funds seek returns for the pool of investors, hedge funds typically take on high-leverage positions in hopes of greater returns. Mutual funds are subject to more regulations and are generally less risk-tolerant. Mutual funds are also widely available to retail investors, whereas hedge funds are almost exclusively available to high net worth individuals.