Then, there are hedge funds. Hedge funds have fewer restrictions on their trading strategies, which allow them to take short positions and also use derivatives such as options or futures. Hedge funds typically take money from high-net-worth individuals or institutions such as pension funds. Hedge funds generally require a higher minimum investment, and may require lockup periods during which investors are not allowed to withdraw their investments. So, here’s a question for you to ponder. Why are hedge funds called hedge funds? Is it A, hedge funds are named after hedgehogs, who play in the hedges of a rose garden or B, hedge funds are named after hedging strategies designed to limit portfolio risk? You’ll find out the correct answer by the end of this lesson so stay tuned.