Hedge funds are a type of investment fund that pools capital from accredited individuals or institutional investors and invests it in a variety of assets with the goal of generating high returns. These funds are typically managed by professional investment managers who employ various strategies, such as long-short trading, leverage, derivatives, and arbitrage, to generate profits. Hedge funds are known for their flexibility in their investment strategies and their ability to generate high returns, but also carry higher risks compared to traditional investment funds.