Hedge funds belong to the group of non-traditional funds, alternative forms of investment. They are actively managed funds that want to achieve an attractive absolute return. The main characteristics of hedge funds are that they use derivative financial instruments, they are allowed to sell securities uncovered and they use leverage (debt). The goal of hedge funds is to achieve absolute returns, achieving always constant returns, regardless of the situation on the capital market. They set a certain rate of return and then try, with as little risk as possible, to achieve the set return. According to the way of working and strategies of entering the financial market, the most well-known strategies or types are the market neutral group, long-term / short-term share group, targeted trading group and group of special strategies. These funds have attracted a large community of investors since they began operating in the financial market. They are characterized by a freer choice of investment strategies, as well as the use of complex instruments such as leverage. One of the markets in which this industry does not have such a presence is the market of post-socialist countries in Central and Eastern Europe. Among them is the Republic of Croatia, which needs to work on several elements of its financial system in order to increase opportunities for the hedge fund industry, but also for the entire investment fund industry.