What is a Hedge Fund?

Hedge funds are often confused for other types of funds like private equity funds, mutual funds and others.  So, to clear up any confusion, I recorded the following video that provides a short, clear definition of what is a hedge fund.

Video Transcript/Summary: The strategies and tips provided within this video module include:

1. A hedge fund is a private investment partnership where the portfolio manager typically co-invests their own assets with the assets of the clients which they manage.
2. Hedge funds charge a management fee and performance fee.
3. Management fee is typically 2%.
4. Performance fee is typically 20%, but has been known to reach as high as 30%.
5. The prime difference between a hedge fund and that of other management funds is the fact they charge both the management and performance fee.

Transcript of What is a Hedge Fund?

Hello, this is Richard Wilson and today we’re going to define What is a Hedge Fund? Hedge Fund is a private investment partnership where the portfolio manager typically co-invests their own assets with their investor’s assets. They generally charge two types of fees: a Management Fee and a Performance Fee. Hedge funds charge management fees typically of 1% to 2% and they charge performance fees of generally 10% to 20%, some actually can be as much as 30%.

What really makes a hedge fund different from other types of investment funds is the fact that they charge both a management and a performance fee. Thank you.

I hope that this video has given you a better understanding of what exactly a hedge fund is.

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