Choosing the correct hedge fund is different for each investor. There are many factors that need to be considered and analyzed. As an investor, you should determine an acceptable level of risk for your portfolio. You should never risk money that cannot be lost or that is needed for short term obligations. Hedge funds may invest in illiquid assets and have lock-up periods that prevent you from withdrawing your money quickly. When choosing a strategy, it is important that you consider the risk vs. return for that specific strategy. It should match both the desired risk and return objectives of your investment portfolio. Proper due diligence should follow in investigating management of the fund. Make sure that you are confident in your manager's skill, certification, and ethics. Also, you can request marketing materials from the fund and may ask for other third party advice.