Ans. A hedge fund is a financial vehicle in which money from multiple individual and institutional investors is pooled and invested in a variety of assets such as stocks, bonds, commodities, foreign currencies, cryptocurrencies, derivatives, and more with the goal of maximizing returns. The pooled funds are managed by professional fund managers at the investment firm that offers the product. Originally, hedge funds were focused on managing investments to hedge against market risks, hence the name. However, over the years, these funds have grown increasingly more aggressive, with high-risk/high-return strategies favored by fund managers. Today, hedge funds are characterized by a higher risk profile than the other popular types of funds — mutual funds and index funds.