Hedge Fund

Hedge funds originally attempted to reduce risk thus gaining their “hedge” name. But now they are typically aggressively managed using various advanced strategies to attempt to maximize returns.

Hedge funds mainly attract wealthy accredited investors as their investors though pension funds also make up a sizable portion of their investors. Hedge fund managers are mostly compensated on performance, giving them an incentive to maximize returns. Hedge funds are less regulated than mutual funds.

Hedge funds have become increasingly popular during the early to mid 2000s, however, the huge growth in the size of the industry has led to diminishing returns.