<p>Hedge funds are private investment funds that pool capital from wealthy investors and institutions to invest in a variety of assets, using complex strategies to generate positive returns regardless of whether the broader market is rising or falling. They employ a range of tactics, including short selling, derivatives, and leverage, to achieve their goals.</p>
<p>Hedge funds matter because they provide an alternative investment option for sophisticated investors seeking to diversify their portfolios and potentially achieve higher returns. However, they are typically only available to accredited investors due to their complex nature and high risk. Additionally, hedge funds often have high fees, including a management fee and a performance fee, which can impact overall returns.</p>