hedge fund
noun
noun: hedge fund; plural noun: hedge funds
an offshore investment fund, typically formed as a private limited partnership, that engages in speculation using credit or borrowed capital.
that capital comes from somewhere and has to be be paid back
That's a bullshit description I'm afraid.
You think hedge funds run on 100% borrowed money? How exactly would they have the collateral to borrow the money? They get money from investors hoping to get a high return and of course they use leverage. Those investors get paid when the fund performs well and the Hedge Fund themselves get paid a percentage of the gains.
Almost all investment is leveraged. There is nothing wrong with leverage. Every business on the planet uses credit and a huge percentage use borrowed capital. I presume you don't use a credit card as leverage is so bad. I presume you also didn't borrow money to buy your house.
The very nature of a futures trade is that it's leveraged. You can't even buy un-leveraged futures contracts. You think Kellogs are evil for buying Corn Futures? Or that farmers are evil for selling them?
Honestly - you really don't understand what you are talking about. Hedge funds cover a massive range of investment strategies but what makes a hedge fund a hedge fund is the way they get paid and the regulations they have to comply with.