Yes, you can invest in a hedge fund. Wealth can provide access to “exclusive” investment opportunities. Hedge funds were considered one of these. The fee structure was usually 2/20, so you pay 2% of assets and 20% of all profits. This is extraordinarily expensive, and with the required minimums it is difficult for the average investor to get in. Perhaps more significantly, the high barriers to entry imply inherent manager skill, guaranteed higher returns, exclusivity, and status.
So even though you can invest in hedge funds, the question really is whether anyone should. First, you need to separate the myth from the facts. Several recent articles in Financial Times summarize hedge fund returns (check out https://www.ft.com/content/721650d4-68dc-11e8-8cf3-0c230fa67aec and https://ftalphaville.ft.com/2018/04/20/1524196800000/These-hedge-fund-numbers-can-t-be-right/). It turns out that your odds when investing in hedge funds are not very good at all.
Of course, you can always find empirical evidence of a specific hedge fund that has crushed the markets. You can also find individual stocks that have done incredibly well over the years and that have made a few investors extremely wealthy. Unfortunately, these are always exceptions. It’s like hitting the lottery. Ahead of time no one knows which fund (or stock) will outperform. And studies have even suggested that the few that do can be explained by chance alone, rather than any skill.
So, what does that mean for the individual investor. Well, actually that’s awesome news. It turns out that, regardless of your assets (10k, 100k, 1M, or 100M), you are far better off sticking to a well-diversified, risk-appropriate portfolio of low-cost index or asset class mutual funds for the long term. Good luck.