Hedge funds are investment funds that pool money from various investors to invest in a wide range of assets, including stocks, bonds, and commodities. They aim to generate high returns by using various strategies, such as short selling and leverage. Unlike traditional mutual funds, hedge funds often have fewer regulations, allowing them to take more risks. Investors in hedge funds typically include wealthy individuals and institutional investors, as these funds often require a high minimum investment. The managers of hedge funds are usually compensated with a percentage of the profits, which can lead to significant earnings if the fund performs well.