It is a collective investment, similar to a mutual fund, that tries to make positive returns on invested capital whether the markets are rising or falling. In order to invest in a hedge fund, an investor needs to be a qualified investor or purchaser, as defined by U.S. regulations. Since a hedge fund limits the number of participants in the fund, hedge funds are not sold to the general public, and may therefore be exempt from certain regulations that affect how the fund is structured and managed. But the fund must comply with any regulations within the countries in which it operates.