- The definition of a hedge fund is a group of investors who pool large sums of money in order to invest it in riskier investments to maximize returns.
An example of a hedge fund is a group of investors who have pooled their money to invest it in unconventional investments or to purchase speculative stocks.
hedge fund - Investment & Finance Definition
Private investments, open to large customers and wealthy individuals, that use borrowed funds to invest in the stock, bond, and foreign exchange markets. Hedge funds are exempt from regulation by the Securities and Exchange Commission (SEC) under federal securities laws. Thus, hedge funds are not required to limit the types of financial instruments included in their fund and don’t have to disclose information about their holdings beyond what they voluntarily want to disclose. Hedge funds often take 20 percent of the annual return for their profit, with an annual fee of about 2 percent.