Hedge funds make money from imposing steep fees on investors, as well as from investment performance

The 'Two and Twenty' structure allows hedge funds and private equity firms to earn significant returns

With this structure, firms charge limited partners or "LPs" a 2% management fee for overseeing the fund (assets under management or AUM) and take 20% of the fund's overall profits (carried interest). Many private credit funds also operate under this structure.

A hedge funds timeline, from the 1940s onward

Since Alfred Winslow Jones formed the first hedge fund in 1949, traders have rolled out an increasingly complex array of investment strategies. They all aim to beat increasingly efficient markets and/or to provide ample downside protection against sell-offs.

How ‘vulture’ hedge funds make money

Some hedge funds specialize in snapping up distressed assets, like failing newspaper chains, and further stripping down their operational expenses in a bid to make a profit from the initial capital outlay. Delve into how one secretive firm known for the practice operates—and what’s at stake for the broader economy.

Many hedge funds use short selling as an alternative investment strategy to offset risk

Hedge funds typically use a "long-short" investment strategy—where funds diversify by investing in a mix of long positions and short positions—to balance risk and maximize profits. Including short positions gives hedge funds some protection against downturns in the market, although the strategy can have uncapped losses for investors.

How to put on a hedge

These days, hedging your portfolio isn’t just for hedge fund managers. An explainer from Robinhood delves into what a hedged position actually is, why traders put on hedges, and how you, too, can work to guard your holdings against a market downturn. The idea is to derive gains from your portfolio when markets are trending up, down, or sideways.

How mutual funds work

Mutual funds function similarly to other types of investments. If you want to invest, you go through a brokerage firm. However, they have a few key differentiators. Most are actively managed by a broker instead of passively earning you returns. Plus, they can carry some hefty fees.

90 percent of active managers of large public funds underperform

High fees tend to eat away at whatever edge professional managers accrue, resulting in most such funds performing worse than their underlying benchmark indexes like the S&P 500.

Explore the differences between private equity, venture capital, and hedge funds

Private equity firms focus on buying and improving private companies with the intent to sell them for profit or take them public. Venture capital is technically a form of private equity in which investors focus on startups and generally don't seek majority control of the company. Hedge funds are pooled investments for sophisticated investors that pursue a wide range of often complex strategies.

Some multibillion-dollar pension funds depend on hedge funds

Pensions are responsible for safeguarding the retirement plans of many corporate and government employees alike. Pensions differ from 401(k) plans and sometimes rely on alternative assets, like hedge funds, to insulate their portfolios of billions of dollars from volatility in financial markets. Read the case top pension advisor Cambridge Associates makes for hedge funds.

What happens when a hedge fund grows too big, too fast?

Dmitry Balyasny, who heads what has become one of the top US hedge fund firms, got a crash course in finance as a teenager, when he started trading stocks—and started losing money. Balyasny went on to lose a whole lot more money. But, this time, it wasn’t his to lose. To find out more about his firm’s remarkable comeback, read this article.

Active investors try to 'beat' the stock market's performance

There are two primary types of investment strategies that professional investors use: active investing and passive investing. While active investors try to "beat" the stock market's performance, passive investors have a bit more faith in the system.

One $100 investment in the Medallion Fund skyrockets over time

The Medallion Fund, the famously secretive quant fund that invests billions of dollars for the partners and employees of a single firm with a legendary track record, has trounced the market for more than three decades. While its results are an extreme outlier, this visualization showcases the power of compound interest.

Credit card companies make money through interest, annual fees, and more

They also profit from interchange fees, the fee the retailer has to pay the credit card network in order to facilitate a transaction. The fee is typically between 1% and 3% of the transaction amount.

The world’s top 10 hedge funds

The world’s top 10 hedge funds based on total assets under management include Ray Dalio’s Bridgewater Associates and Citadel.

Platforms like AngelList help angel investors find startups to fund

Angel investors leverage their high net worths to fund seed-stage startups. While they could see high returns, investing in such an early company is a risk.

Companies pay multiple fees as part of the IPO process

When a company decides to approach IPO, it typically hires investment bankers—who earn about 7% of the IPO’s gross proceeds—to help set the organization’s target valuation range and schedule an IPO date. But that isn't the only fee associated with the IPO process.

How fee-free Robinhood makes money

Robinhood is both loved and hated by retail investors. Although its mobile app is easy to use and transactions on its platform are fee-free, many individuals have taken issue with a controversial practice that drives 75% of its revenues. Robinhood uses payment for order flow, essentially taking payment from other brokerages to redirect users’ trades. Read up on how PFOF works here.

Financial rules that many FIRE followers live by include guidelines around tax efficiency and more

Many FIRE proponents follow specific financial rules, like the 4% rule, in order to achieve FIRE. They also take steps to create an efficient tax strategy and take advantage of compound interest.

The total cost of owning an ETF is the sum of the holding costs and the transaction costs

Holding costs include things like the expense ratio, or the annual fee that a fund issuer charges. Transaction costs include things like brokerage commissions, or the fee that a broker charges to enact a trade. However, in recent years, most brokers have essentially eliminated commissions on ETF trading.

Compounding, explained

During conversations about personal finance, the term "compounding" gets thrown around—but not everyone understands how compound interest and compound returns work. Broadly speaking, compounding is what happens when you not only earn returns or interest on your original investment, but also on the accumulated returns or interest you receive over time. This article explains how both of these processes function, and what compounding could mean for your wallet.

F1 is a billion-dollar industry

...but that money doesn't come easily. Team principals have to constantly ensure money is coming in to fund their million-dollar cars every weekend. This CNBC video explores all the costs of running a team. It also shows how team principals woo sponsors and find ways to maximize their technology with a cost cap.

About 30% of financial advisors opted for fixed and indexed annuities in 2023

An infographic that shows the most common types of investments used by financial advisors with their clients in 2023 also found that nine in 10 advisors used ETFs, and three-quarters invested in cash and cash equivalents.

How universities manage their endowments

The CNBC video report explores how elite universities like Harvard handle their massive endowments, the ethical debates around their investments, and the tension between growing wealth and rising college costs. If you’re curious about where billions of dollars in higher education go, why tuition remains high despite huge endowments, or how student activism is pushing for ethical investing, this video offers a revealing, accessible look at the financial engines behind America’s top colleges.

Investment banking jobs are famous for their long hours

Although some banks report attempts to cap hours for junior employees at 80 hours per week, these employees often continue working many more hours than that. Goldman Sachs analysts, for instance, went viral back in 2021 when they put together a PowerPoint deck complaining of 100-hour work weeks and mental health struggles.

While the first exchange-traded fund (a 'basket' of different assets that can be bought and sold on a stock exchange) in the US only launched in 1993, the global ETF market has grown to more than $10T in the short time since.

The Fed operates within the open market as a competitive bidder of interest rates

Because it’s viewed as a risk-free platform to earn interest, whatever rate it sets becomes the default benchmark. To maintain its target rate prescribed by the Federal Open Market Committee, the Fed has various tools it offers both commercial banks and home loan institutions.

Venture capital is a form of funding provided to early-stage companies with high growth potential, typically in exchange for an equity (or ownership) stake

Learn how to read a prospectus, the juicy document that any company must file with the SEC before going public.

Warren Buffett's former professor Benjamin Graham is known as the 'father of value investing,' a strategy in which investors seek to buy stocks trading below their intrinsic worth.

The Nasdaq's 'Magnificent 7' companies are responsible for roughly 40% of the Nasdaq 100 index's gains, while the remaining 93 companies account for the other 60%.

How Amazon operates a 'flywheel' business model, a self-reinforcing cycle that drives continuous growth

Netflix profits when you're not watching, and its movies are designed that way—read a detail-rich critical essay exposing lesser-known Netflix takes

The price of gas is a composite made up of several different factors, with the federal gas tax making up less than 20% of what drivers pay at the pump.

Art theft is the third-largest source of criminal revenues worldwide, thanks in part to the subjective nature of valuing a work of art.

Despite being favored by 87% of Americans, Congress does not have term limits.

The idea for the Federal Reserve was conceived in secret in 1910—with bankers donning duck hunt gear for disguise while traveling to a remote country club on Georgia's Jekyll Island

Chaos theory—informally known as the butterfly effect—is the reason why weather forecasts are presented with probabilities rather than certainties.

Hotels in Cannes, the glamorous city on the French Riviera, hire hawks to ward off seagulls during the city's famous film festival.

According to the physics of black holes, our 4D reality may be a hologram—a projection of information coded on a 2D surface on the edge of the universe.

Gerrymandering works through two techniques: cracking opposing voters across districts to dilute their power, and packing them into a few to waste their votes in lopsided majorities.

How fusion—which releases energy when two lighter atoms combine to form a heavier atom—differs from fission

Use this calculator to find the dollar value of your mental load, from meal planning to coordinating after-school care for your children.

US housing costs have risen by roughly 175% between 1991 and 2026—but a growing number of Gen Zers are becoming homeowners anyway. In 2025, 4% of homebuyers were Gen Z, up from 3% the year before.

For centuries, Niagara Falls has been a magnet for daredevils seeking to conquer one of nature's most powerful wonders, with its 200-foot drop and water rushing at 32 feet per second with 280 tons of force.

The first steps to rebuilding your credit score include getting to know exactly what's on your credit report and figuring out how far you are from the '700 club,' or 'good score' range.

Hear 50 years of iconic hip-hop samples, the genre's foundational looped tracks

Some coin denominations have ridges etched on their sides, partly to prevent counterfeiting, in a practice called 'reeding.'

Up to a million Girl Scouts sell about 200 million cookie boxes every spring, generating $800 million, largely because refusing a child is frowned upon

Larger animals like giraffes, elephants, and blue whales have developed a unique defense against cancer, a phenomenon known as Peto's Paradox

A 2019 Facebook event called on attendees to "Storm Area 51, They Can't Stop All of Us," resulting in countless memes, the creation of a music festival, and eventually the arrests of those who did try to approach the area.