Hedge fund is a private investment partnership and funds pool that uses varied and complex strategies and invests or trades in complex products, including listed and unlisted stocks and derivatives. These managers use a wide range of strategies to earn above-average investment returns.

A hedge fund investment is often considered a risky, alternative investment choice and usually requires a high minimum investment or net worth. Hedge funds typically target wealthy investors.

Hedge funds are not regulated as heavily as mutual funds and generally have more freedom than mutual funds to pursue investments and strategies that may increase the risk of investment losses.

Hedge funds are limited to wealthier investors who can afford the higher fees and risks of hedge fund investing, and institutional investors, including pension funds.

Hedge fund investors typically include high net worth individuals (HNIs) and families, endowments and pension funds, insurance companies, and banks. These funds work either as private investment partnerships or offshore investment corporations.

They are not required to be registered with the securities markets regulator and are not subject to the reporting requirements, including periodic disclosure of Net Asset Value or the NAVs.