There is no such thing as a typical hedge fund, and part of the attraction of this asset segment is the huge diversity of investment approaches and assets used. However almost all hedge funds do have one commonality in their investment objective: they “hedge”, in the sense that they actively try to manage risk. The defining investment characteristic of hedge funds is that they do not take pure asset risk. Investors pay well for hedge fund managers to manage and control risks in ways that simple buy-and-hold investment cannot.