It’s always tempting to look for the next hot investment. Physician investors talk among each other and share insights they’ve heard from analysts, advisors, or that ambiguous friend of a friend. One phrase that you may have heard thrown around is hedge fund. As with any investment vehicle, do your research, consult a trusted financial advisor, and never overextend your investing reach.

Investopedia defines hedge funds as an investment vehicle in which investors pool their money to invest in securities or other types of asset classes. The fund is actively managed by a hedge fund manager who is always looking for strategies to outperform average investment returns. Sounds like a good idea, right? You should know that these strategies can include buying assets with borrowed money and pursuing unusual asset classes. Hedge funds can, therefore, be a risky endeavor. On the flip side, hedge funds can also be an incredibly profitable endeavor.

The U.S. Securities and Exchanges Commission (SEC) clarifies that hedge funds are not as heavily regulated as mutual funds and, as a result, have greater latitude in incurring risk exposure. Because the exposure can be great, participation in hedge funds is limited to wealthier investors who are able pay the higher fees associated with these funds and who would be able to withstand a greater amount of risk.

Once you determine whether you are even able to invest in a hedge fund as an accredited investor, there are several other details you should investigate. The SEC recommends that you do your homework and read through a hedge fund’s prospectus and any other related materials you have access to. Find out what the fees will be and what the limitations are on selling your shares. Some hedge funds allow you to sell only a few times a year. You should also take the time to research the hedge fund manager and make sure he or she is qualified, with an untarnished record. Finally, get trusted advice before entering into a hedge fund. If you are nearing retirement or if you are unable to withstand a major loss, this may not be the right investment for you.