The term hedge fund has evolved from the early days when hedge funds actually hedged their positions as compared to the general markets. Today, though, hedge funds are private investment funds that follow a variety of strategies (Global Macro, market neutral, Long/Short, commodities, etc.) many using leverage, in order to generate outsized returns (many times with outsized risks) versus the market. In many ways they are less-regulated mutual funds with higher fees. Their performance across time has been shown to be relatively average (with high costs) and many large institutions have begun to pare back their exposure to the funds.