What are hedge funds?

Hedge funds are investment funds that pool capital from accredited investors or institutional investors and use a variety of investment strategies to generate high returns. Unlike mutual funds, hedge funds are not regulated as heavily, and often use leverage and more complex investment strategies. Hedge funds are typically structured as limited partnerships, and their managers are compensated based on a fee structure known as "two and twenty," which means they receive a management fee of 2% of assets under management plus 20% of profits. Hedge funds are known for their ability to generate significant returns, but they also carry high levels of risk and may not be suitable for all investors.