Once dominant, hedge funds have struggled since the crisis, although there are notable exceptions. : Hedge funds are alternative investments. Just like mutual funds, they use pooled capital to make investments in liquid assets. Hedge fund managers typically identify market opportunities to generate returns for their investors using highly aggressive investment strategies. This makes these funds far riskier than mutual funds and other traditional investment vehicles. Their significant minimum investment levels and outrageous fees weed out all but the wealthiest clientele. This means they're only open to accredited investors, including institutional investors and those with a high net worth.