What are the costs I pay for investing in a hedge fund?

What are the costs I pay for investing in a hedge fund?

When you invest in a hedge fund, you are going to have two real layers of cost. One cost is going to be the acquisition cost of whatever the hedge fund is investing in. The other cost is going to be the cost to actually run the hedge fund. That's going to be the cost of the hedge fund itself, then the expenses or the salary paid to the fund manager. As it relates to what those actual fees might be that the money manager is charging, usually there's two components. There's the straight asset-based fee that they're going to charge, and then there's usually a performance-based fee. The better the performance is that they're giving you on the hedge fund, the more they're going to take a piece of that performance as their management fee.