What Is a Hedge Fund?
The term hedge fund describes an investment structure for managing a private, unregistered investment pool. Typically, this structure charges an incentive-based fee that compensates the fund manager through a percentage of the profits that the fund earns. For most hedge funds, exemption from securities registration limits the number of participants, who must also be accredited investors, qualified investors, or institutional investors. All hedge funds are not alike; managers usually specialize in one of a diverse number of alternative investment strategies operated through the hedge fund structure.
THE TERM hedge fund has been used to describe both an investment structure—a commingled investment fund—and a strategy—a ...