How Hedge Funds Make Money (and Who Really Keeps It)

Hedge funds made a record $543 billion for investors in 2025. But the managers got paid first, and some took home billions. 💰 Here's how hedge funds really make money, explained simply. We follow the money from the famous "2 and 20" fee model to the strategies behind the biggest wins and losses in finance. 📌 In this video: • What a hedge fund is, and why it plays by looser rules • How 2 and 20 fees pay managers whether they win or lose • Long/short investing, global macro and George Soros's 1992 bet against the pound • How leverage brought down Long-Term Capital Management • Renaissance's Medallion Fund and the rise of quant trading • Citadel, Millennium and the multi-manager "pod shop" model • Research showing managers kept 64 cents of every dollar of excess gains • Warren Buffett's $1 million bet against hedge funds 🧠 Key takeaway: before you judge any fund by how much it made, ask how much investors actually keep after fees. Sources include HFR, LCH Investments, Institutional Investor, NBER research and Berkshire Hathaway. 📩 For collaborations and business enquiries, contact dayflow.media@gmail.com Chapters: 00:00 A $543 Billion Year 00:30 What a Hedge Fund Is 01:08 A $5.6 Trillion Industry 01:45 Two and Twenty Fees 02:26 Long Short Explained 03:02 Soros and Black Wednesday 03:38 LTCM and Leverage 04:22 Renaissance and the Quants 05:00 Multi-Manager Pod Shops 05:40 Who Keeps the Gains 06:17 The Managers' Paydays 06:54 Buffett's Hedge Fund Bet 07:31 The Verdict on Hedge Funds

Added 20 Oct 2026