Hedge fund definition: A hedge fund is an investment vehicle where the manager and employees have huge incentives to outperform the market. Hedge funds usually take away 20% of the profits they generate about a certain threshold which is called a hurdle rate. Insider Monkey published an article about hedge fund definition, here is an excerpt from that article.
The best performing hedge funds often times experience monthly returns of 40 percent or greater.
While many people confuse hedge funds with mutual funds, there are differences to be aware of. For example, mutual fund owners are public corporations, which is not the case with a hedge fund. Additionally, hedge funds are not regulated by the Securities and Exchange Commission.
