hedge fund

A pooled investment vehicle. Hedge funds usually are limited partnerships organized to invest in securities and most are structured to award the general partners—the fund managers—a share of the profits. Hedge funds are so named because, traditionally, they usually engage in both long (buying) and short (selling) positions with the goal of profiting regardless of the direction of the major market indexes. However, the strategies employed increase the risk of investment losses, and the results achieved can vary widely from one fund to another. You generally must be an accredited investor to invest in hedge funds, which means having a minimum level of income or assets.