Hedge funds are lightly regulated (some would say barely regulated) vehicles for maximizing investor return. Despite the fact that "to hedge" something generally means to reduce risk, hedge funds often take high risk positions in the stock market and other investments.
Should you consider investing in a hedge fund? The answer is that for many of us these investment vehicles aren't available.
Although hedge funds are lightly regulated, they are required to qualify investors. Some hedge funds only allow super rich individuals or institutional investors to participate.
Other funds may follow less stringent guidelines and permit modestly well off investors. The idea is higher income investors can better afford the risk.
However, because of the light regulatory oversight, it is questionable whether all investors are "well qualified" or not. Most hedge funds don't want investors with modest means. Initial investments are often very high and this limits entry.
If you are like most individual stock investors, you probably do not qualify for most hedge funds. If you are approached (either in person or by some other means) by someone claiming to represent a hedge fund, be very careful about investing.
Successful hedge funds often score large returns for investors, but the risks are correspondingly high. If the hedge fund manager's investment strategy is successful, they will make those big returns. If not, you can easily lose your entire investment.
