A hedge fund is an investment fund, somewhat similar to a mutual fund. Like a mutual fund, a hedge fund makes pooled investments in various securities that are expected to appreciate in value. However, a hedge fund differs from a mutual fund in two key ways. First, unlike mutual funds, hedge funds “hedge” their investments by also making “short” investments, which increase in value when the value of a given security declines. Second, unlike mutual funds, which are heavily regulated and open to all investors, hedge funds are unregulated and only open to so-called “accredited investors.” Typically, such investors are defined as institutions (eg pension funds, banks) and high net worth individuals, given the significant minimum level of initial investment (eg $1 million to $10 million) required by hedge funds.