A hedge fund is a kind of fund that pools the capital of investors and then invests them in a variety of schemes. Retail investors cannot invest in hedge funds.
The goal is to generate higher returns which can be achieved due to the investment of high amount of pooled capital in different securities. Hedge funds are much more flexible than mutual funds or any other investment funds. Apart from this, there are fewer regulations, which is why they are not available to the general public.
Points to remember:
Hedge funds are accessible only to accredited investors.
Their aim is to achieve positive returns irrespective of the fact whether the market is rising or falling.
Unlike mutual funds, whose investment is limited to stocks and bonds, hedge funds can invest anywhere.
Example: Ambit Corporate Finance Pvt. Ltd. is one of the major hedge funds in India.