Speculative funds managing investments for private investors (in the US, such funds are unregulated if the number of investors does not exceed one hundred)
Funds that are extremely flexible in their investment options because they use financial instruments generally beyond the reach of mutual funds, which have SEC regulations and disclosure requirements that largely prevent them from using short-selling, leverage, concentrated investments and derivatives This flexibility, which includes use of hedging strategies to protect downside risk, gives hedge funds the ability to best manage investment risks