A hedge fund is defined as a pooled investment vehicle administered by a professional management firm. Hedge funds often invest in a diverse range of markets and use a wide variety of investment styles and financial instruments. Many hedge fund investment strategies aim to achieve a positive return on investment regardless of whether markets are rising or falling ("absolute return").

The name "hedge fund" refers to the hedging techniques traditionally used by hedge funds, but hedge funds today do not necessarily hedge. Hedge funds are made available only to certain sophisticated or accredited investors and cannot be offered or sold to the general public. As such, they operate with greater flexibility than mutual funds and other investment funds.

Hedge funds have existed for many decades, but have become increasingly popular in recent years, growing to be one of the major investment vehicles and sources of capital in the world.