Hedge Funds: The Most Lucrative Business Model

What’s up, everyone? Today, we’re discussing hedge funds: the most lucrative business model.

Check out my video!

I run a hedge fund, but its income is minimal compared to some of the top dogs…

Net Income from singular hedge fund source:

• Jim Simons – $3.4 billion
• Israel Englander – $3.1 billion
• Ken Griffin – $2.5 billion

This is the most lucrative business model in the world!

Although we’re talking about hedge funds today, the same goes for all other funds like private equity, venture capital, and real estate, debt, etc.

A fund is a pool of money that investors contribute to. Fund managers draw from that pool to make large-scale investments.

The returns of the investments go back to the pool and are distributed to investors and fund managers.

Which funds invest in what?

• Hedge – public market
• Private Equity – private securities/companies
• Venture Capital – small start-ups
• Real Estate – real estate (duh)

The general partner (GP) manages the fund, or limited partnership (LP).

Before the limited partners (investors) can invest in the LP, they must sign the LPA, PPM, and other related documents.

Then, they’re in!

The GP decides where the investments are made, while investors have no say but also no work.

The fund manager (GP) sometimes hires a management company. They hire IAs and RIAs to help with investment decisions.

Most hedge fund managers follow the 2/20 rule.

This means that they first earn a 2% management fee, and then the remaining 80% goes to investors and 20% to the GP.

For example, if a $100M hedge fund makes $25M, the LP (investors) split $18.4M and the GP makes $2M + $4.6M.

Some fund managers set up their fund in a way that the investors get paid before management. This entices the investors to commit, knowing that they won’t get ripped off.

I mentioned in my video that I run a fund right now; I follow the 2/20 scheme. However, any additional money made past 100% APY is split 50/50 between the GP and LP.

So, there’s countless ways to set up your fund.

I hope you can see now that this is the most lucrative business model!

That’s it for today, click here for coaching and content that will help you start your own fund!

Thanks,

Bridger Pennington

Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!

_{DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the}