by 
Spixxy
ANSWERS: 3
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Copied from the Net: A fund, usually used by wealthy individuals and institutions, which is allowed to use aggressive strategies that are unavailable to mutual funds, including selling short, leverage, program trading, swaps, arbitrage, and derivatives. Hedge funds are exempt from many of the rules and regulations governing other mutual funds, which allows them to accomplish aggressive investing goals. They are restricted by law to no more than 100 investors per fund, and as a result most hedge funds set extremely high minimum investment amounts, ranging anywhere from $250,000 to over $1 million. As with traditional mutual funds, investors in hedge funds pay a management fee; however, hedge funds also collect a percentage of the profits (usually 20%).
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In addition to Barry's answer, don't believe what they say the returns are for the hedge funds. There are many of them that close everyday. The ones that close are not included in the return calculation, therefore making them look more appealing than they truly are!
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Copied from the net. Hedge Fund Securities term that describes funds that use hedging techniques. For example, an option fund may use futures contracts on stock market indexes and short sales with stock options to limit risks. Hedging The use of almost opposite direction securities, instruments, or futures contracts as a method of attempting to reduce market risk. A perfect hedge is one that eliminates the prospects of any future gains or losses. Investors frequently try to hedge against inflation by purchasing assets (e.g, gold) that will rise in value faster than inflation. Hedge Clause A disclaimer used in market letters, research reports, or other printed materials relating to the evaluation of investments. Its intent is to exonerate the writer from responsibility for the information's accuracy.
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