The Collaborative International Dictionary of English v.0.48:

Hedge fund \Hedge" fund`\, n. (Finance)
   a mutual fund or partnership of investors who pool large sums
   of money to speculate in securities, increasing the risk of
   such activity by using borrowed money to leverage the
   investments, or by selling short.
   [PJC]

WordNet (r) 3.0 (2006):

hedge fund
    n 1: a flexible investment company for a small number of large
         investors (usually the minimum investment is $1 million);
         can use high-risk techniques (not allowed for mutual funds)
         such as short-selling and heavy leveraging [syn: hedge
         fund, hedgefund]