The term «hedge fund» first originated in the s after alternative investor Alfred Winslow Jones created a fund that sold stocks short as part of its investment strategy. These legal documents also provide information as to how the managers are compensated. Hedge fund managers are paid an annual management fee, and may be paid a performance fee if they meet a benchmark called the hurdle rate. Most managers have been paid pursuant to the «two and 20» rule — i. They appear to be following the «1. Hedge funds are limited to wealthier investors, who can afford the higher fees and risks associated with hedge fund investing, and institutional investors. Investors invest in hedge funds for varying reasons. Some believe that they can achieve higher-than-average returns, while others seek diversification beyond stocks and bonds. That said, while institutional investors have invested heavily in hedge funds, that has begun to change. Hedge funds offer financial reward...