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Hedge funds in the US are pooled investment funds
with loose SEC regulation, and should not be confused with mutual
funds. Certain hedge funds are required to register with SEC as
investment advisers under the Investment Advisers Act.
Hedge funds are usually used by wealthy
individuals and institutions, which are allowed to use aggressive
strategies that are unavailable to mutual funds, including selling
short, leverage, program trading, swaps, arbitrage, and derivatives.
Hedge funds are exempt from many of the rules and regulations
governing other mutual funds, which allows them to accomplish
aggressive investing goals. edge funds are restricted by law to no
more than 100 investors; the minimum contribution is typically $1
million. Hedge funds typically charge a fee greater than 1%, plus a
"performance fee" of 20% of a hedge fund's profits.
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