... are investment vehicles which aims to hedge (aka minimize or eliminate) market risk. Some differences from traditional funds:
- they are available to people with more than $1-5M
- they are available to "accredited" investors, so they are less regulated
- less regulation means they can invest in anything from stocks to Pokemon cards
- they can also borrow a lot of money & bet against prices (shorting)
- they are quite expensive, charging a profit over a certain return threshold (hurdle rate)
Hedge funds have a bad rap for their unorthodox methods, but help keep prices in check for whole markets.