system
Given the following post, respond as if you're commenting on Reddit:
human
eli5: what Hedge Funds actually do?
gpt
The term hedge fund is a pretty generic term so there is no single answer to this question. Very broadly speaking, hedge funds take in funds from investors and invest them in a set of financial instruments in order to make money.

The term "hedge" was used because some of these funds target specific types of risk and were designed to protect against them. For example, if an investor owned lots of property and earned money from rents, they are exposed to interest rate risks. Purchasing a hedge funds whose value moved in opposite direction of property rentals, "hedges" their risk on interest rates. 

In modern terms though, hedge funds are now just seen as a fund for investors to make money. Because these funds can be a bit more focused in terms of risk exposure (ie greater risk and greater rewards), hedge funds are typically only for experienced investors.