Both hedge funds and venture capital funds offer investors opportunities to make money. They share the same ultimate goal of generating the highest possible return through smart investments, but they have some fundamental differences that investors should understand.
Hedge funds Hedge funds are private investment funds that pool capital from investors and use specific strategies to generate a return on investment. The name is derived from the practice of hedging market risk by pairing complementary investments and thereby offsetting losses. Hedge funds are typically classified according to their investment style. While some hedge funds focus on stocks, for example, others focus on distressed debt or commodities.
