Hedge Fund
The "hedge fund" category includes diverse "alpha strategies" that have little in common other than structure and compensation. The structure is typically a limited partnership, with the manager acting as the general partner and investors as limited partners. The compensation system is "2 and 20," meaning a 2% management fee and 20% of any return after the management fee.
Some strategies include "long-short equity," "convertible arbitrage," "event driven" and "fixed income arbitrage." Because these strategies are often complex they are often misunderstood and, consequently pass through dramatic cycles of popularity. When hedge funds are "working" some investors mistake them for an all-purpose solution. When they are "not working" they are cast aside as little more than snake oil.
The truth, as you might imagine, is somewhere in between.