An investment fund that is offered and sold to investors by a private offering of a company that is not a registered investment company. The hedge fund has recently become subject to some reporting regulations but remains relatively free of reporting regulations. Contractually, the hedge fund usually has some ability to use or create leverage, take long or short positions in securities or other assets, or use a variety of derivative instruments in pursuit of a strategy or goal. Investors frequently invest in a hedge fund in order to achieve an absolute rate of return that is uncorrelated to the typical indices of the equity markets or debt markets. Hedge fund managers are typically compensated based on assets under management as well as fund performance.