A hedge fund is an investment. It is a way of investing money.[1] Like mutual funds, hedge funds pool money from investors to try and make a profit. Unlike mutual funds, hedge funds do not have many regulations to protect investors.[2]
Hedge fund strategies are more risky and flexible than strategies used in mutual funds. For example, they might borrow money which is called a leverage, bet on stocks they think will fall or short-selling, or use other speculative investment practices that is not often used in mutual funds.[2]
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