How Hedge Funds Make Money (Fee Structure Explained)

In this video I talk about the 2 and 20 fee structure that hedge funds and private equity firms commonly use. I illustrate how they can make a lot of money given the way their fees are set up. Enjoy!

TIMESTAMPS:

00:09 Management fee (2%) and performance (20%) fee example
01:19 Carried interest and the hurdle
02:14 Why hedge fund investing is lucrative

Recommended Reading:

Video suggestions are most welcome – feel free to leave them in the comments below!

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My equipment:

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Careers can be tricky. I want to change that.

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Hedge fund fee structure

#HedgeFunds #Students #Careers

[parisfrance]

next video : job roles in a hedge fund (salary, skills etc)

[NyanBlaze]

Always educating us Afzal! Loving the bookshelf, maybe you could share some of your favorite reads.

[ThermSupern]

Suggestion: What trading platforms would you recommend? If you have money and want to invest in financial markets, what platform would you choose?

[sakethbenduri]

For the performance you've put in the video, you deserve a good fee (>500 Likes minimum). Thank you for enriching our knowledge!

[arunkumarthiyagaraj]

Bro hierarchy goes like Management fee (2%), 5% committed return to investors, 20% as performance fee & balance will be distributed to investors based on their proportion. Correct my understanding

[damob]

In the world of finance and stock/FX trading what’s better a mac or a windows device ?

[hasanozman]

You should add a excel template. it makes the walkthrough more clear.

[Tman-]

Greetings Mr. Hussein. Thank you for the very informative channel and the great content you post. I have been wondering if it would be possible for you to do a video on the FMVA certification and a comparison of it with the CFA qualification since you have already covered the CFA in great detail and compared it with a Masters qualification.

[zmsgaming]

Hey Afzal, what A levels are the best for getting into investment banking? I am thinking of doing maths, economics, business and physics — will these subjects get you into IB also are there any specific subjects that are required/ needed or best to get into IB?

Thank you

[hussainak]

Hi Afzal bhai !!! Big fan of your videos. Basically I am looking to get into investment banking (Deals to be more specific). I got a bsc in Accounting and Finance from the University of Manchester. Now pursuing a Msc in Finance at QMUL from September. I have not got any relevant prior insight weeks or interships experience. what are the odds of me securing a role in the IB without an intership/insight week. I heard banks usually only hire graduates with internships?. How about working in the big 4 for 2 years than moving to a bank. ie deloitte/EY/PWC got a graduate program in deal advisory M&A. I would appreciate if you could provide more insight.

[abdulqayoom]

Please Make a video on how to prepare for CFA LEVEL 1?

[irfanaditya]

100M x 5% = 5M, 40M-5M= 35M. I thought GP get 20% from 35M

[maksymstrukov]

How to become a part of hedge fund team?

[economist]

Hi, I am a student and have a couple of questions, can I send you a message?