Hedge Funds - What are They?
One of the most unique forms of investments is investing through a hedge fund. 

Hedge funds are investment funds that are available only to a limited number of investors, but often provide investors with both risk and return that are considerably higher than investment averages. 

A hedge fund normally follows a certain investment strategy, but the strategy that is used can range considerably from one approach to the next.
 
Since most hedge funds are privately held and are not available to the general public, they are not required to adhere to many of the regulations that typical investment funds must follow. 

One key difference between this type of funds and typical types of funds is that they do not necessarily have to carry a market price.  Also, the shares of these funds are not traded publicly, and in many situations are not easily liquidated. 

Those who invest in hedge funds are normally paid an annual rate of return, although no return is guaranteed.  Furthermore, the initial investment could suffer a substantial loss if the fund makes some poor investments. 

Due to the high risks and lack of liquidity, most people who invest in these funds are required to be quite wealthy and meet certain financial requirements.
 
As mentioned earlier, hedge funds are not required to follow any specific investment strategy.  However, most of the strategies that funds follow into a few different categories.  One common strategy is the global macro strategy. 

When using this strategy, a fund will take positions in derivatives which are based on the movement of financial markets located around the world. 

Another strategy is to invest in emerging markets.  When following this strategy, a fund will invest heavily in countries with growing economies, such as India and China. 

For a more conservative approach, some funds take a market neutral approach which aims to carry a diversified portfolio.