Which of the following is the common structure for hedge funds?

Hedge funds typically operate under a structure known as limited partnerships. This structure is advantageous because it allows a small group of investors, who are often high-net-worth individuals or institutional investors, to pool their resources while minimizing regulatory burdens. In a limited partnership, the general partner manages the hedge fund and has full liability for its debts and obligations, while the limited partners provide the capital and have their liability restricted to the amount they invested.

This arrangement is particularly suited to hedge funds, which employ a range of sophisticated investment strategies and may take on a higher level of risk, including leveraging and short selling. The limited partnership structure also facilitates the flexibility and discretion that hedge funds require in executing their investment strategies without extensive regulatory oversight that applies to more traditional investment vehicles like mutual funds or publicly traded investment companies.

The other options represent different types of investment funds that do not typically align with the operational model or objectives of hedge funds. For example, bond funds primarily invest in fixed-income securities, target-date funds offer a more conservative and predictable investment strategy with a focus on retirement goals, and money market funds are designed for stability and liquidity with a conservative risk profile. These funds generally do not require the same level of flexibility or aggressive investment strategies that hedge funds employ.