A hedge fund is an investment vehicle that pools capital from accredited investors to invest in a variety of assets. These funds often employ diverse strategies, including long and short positions, leverage, and derivatives, aiming to generate high returns. Unlike mutual funds, hedge funds are less regulated and can take on more risk. Hedge funds typically charge a management fee and a performance fee, which incentivizes fund managers to maximize returns. They are often associated with wealthy individuals and institutional investors, such as pension funds and endowments, seeking to diversify their portfolios and achieve higher yields.