What is a hedge fund? - MoneyWeek Investment Tutorials

Tim Bennett looks at the secretive world of hedge funds, explaining what they do and how they aim to make money.
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[@Steephhnnn]

This guy is fantastic - who’s watching in 2020?!

[@gondola8539]

I am. I love this guy.

[@atharvamehendale4476]

2021

[@Steephhnnn]

@@atharvamehendale4476 yes sir

[@kevinbarrington5355]

I've just watched it for the first time, and it's now 2023. Presentation by Tim Bennett is superb. I wonder if he's still 'teaching'?

[@ryanoneill2352]

This guy is awesome I could listen to him talk about anything.

[@bamudeadson]

"How to flip coke and get rich quick" 😂 *takes bumps throughout the video*

[@yahirlyle5415]

i dont mean to be so off topic but does any of you know a tool to log back into an Instagram account..? I somehow lost my login password. I would appreciate any help you can offer me

[@chanchung7922]

@Atlantis ppppppp

[@hannukoistinen5329]

Just bullshitter!! Nothing else!! Hedge funds are VERY RISKY LIABILITIES for every body, who invests in those funds!!

[@giteausuperstar]

why is everybody moaning in the comments? The sound is fine, he talks clearly and explains it in simple terms. If you don't know what derivatives are then maybe you should watch some of the other videos first, he can't explain every single financial product as he goes along. Thanks for the video!

[@MeneTekelUpharsin]

Hedge funds are so secretive that he has to whisper to talk about it?

[@Mydear___]

Lmao

[@ahmedrashed78]

Haha I thought the same

[@williewilkins7253]

lol...you killin me!!

[@starsareangels]

+Mene Tekel lol

[@johnshah3793]

hahahahhaha...

[@jerryalfred1121]

Stock and fx are the best investments anyone can do. Less risky and highly profitable.

[@marissamatty2703]

Very correct. I have made more money from stock trading than i made from my job.

[@philchege7155]

Jerry alfred. I know it's weird to ask but how much do you make in a month from the stock market?

[@jerryalfred1121]

@@philchege7155 I don't earn a specific amount. I have a broker who handles all my trading activities. By the end of the month, I withdraw my profit while 25% commission goes to my broker and his trading team. Two months ago, i earned $19,300. Last month i earned $26,800. The profits depend on your broker's experience and expertise.

[@savannabills2625]

@@jerryalfred1121 can you give me more details about your broker and how i can connect with him for assistance?

[@robertzajac8234]

Trading is very profitable but it requires alot of effort and professionalism.

[@stevie1der4085]

Love this guys videos. I wish my lecturers at college were as clear in their explanations of the finance world.

[@princesssweeney9233]

Tim makes it very elementary. This is a teacher I can learn from in a classroom. All new to me!

[@charanjitarora3650]

Subscribed! Man! you are too good - you bring the concepts out in simple & realistic way (& not text bookish way)! Keep Going!

[@ChiranjivKumar1991]

This is how professionals talk and I like the way he talks. I am an Indian and i can understand the importance of what he is saying...

[@SuperDuperSte]

I've have been watching your videos over the past few weeks, and found them enjoyable and informative. Congratulations, you now have a new subscriber to MoneyWeek magazine!

[@deathmetaldxb]

Grand video really , Very helpful and explanation was spot on .

[@MoneyWeekVideos]

Good point about the lighting - will see if I can get that changed. Cheers Tim.

[@TomMKW]

wow AMAZING video. i went from knowing 0 about hedge funds to understanding what they are. your presentation style is great and i love how you weighed off the pro's and cons in the end of the video.

[@MG-yp7tb]

Thank you very much! Lucid as always. Great job.

[@SanjayShah]

thanks for this i learn a lot.

[@overhang88]

Please keep making videos. They are really well done and are informative.

[@tommyharris5817]

The best tutorials on YT.

[@TheBartLEGEND]

This is a brilliant video! Short yet very informative.

[@war3190]

Thank you for making this video, I hope you continue to make more.

[@syedgolabarefin1615]

Mr. Tim I like your work here. Thank you.

[@wweandtna12]

Hey Tim, another great video! Does anyone know if There have been any moneyweek videos about the bank bailout?

[@ivalinapasse2469]

Awesome Explanation Love the Accent

[@TobyLerone]

Did anyone notice pacman on the left hand side?

[@MeneTekelUpharsin]

Toby Lerone OMG I thought I was the only only

[@abhilashtawade4199]

Lol

[@jonathanmurray2986]

Couldn't take my eyes off of it.

[@amankalsi4194]

Hahahaha

[@r0f115L4m]

Thanks. Now I can’t unsee it.

[@TheSnookerGym]

Tim I love your videos - the best explanations on KZbin that I have seen. Thank you

[@kevinbarrington5355]

Tim Bennett: I wanted to thank you for your delivery of this video. I thought that you presented it very well. I do note it's been some time since it was made, so a compliment for you that is well overdue. You made it interesting and I enjoyed watching it. I learnt something, thank you.

[@navrajsingh4117]

great vid mate

[@RajendraPrasad-qs2cr]

You are awesome sir. You made complex simple 😃

[@imbcms]

Absolutely outstanding videos!!! Do you have any suggestions for someone interested in a systematic approach to self-studying finance/investing. I have a health sciences background with no prior study of business or finance.

[@alidinojatoi2075]

Best video about hedge funds.

[@kingpanda1]

Great video. Thanks for sharing. God bless :)

[@markseale3235]

thank you for your info just one question, now come banks can get away with what they do?

[@anbarasandhanushkodi]

Nice work mate. thanks

[@kehtang]

another great, easy-to-comprehend video for all laymen who wanting to make their money growth.

[@mgnoonqtr]

Well done !

[@shaiyno]

good video thanks might you be able to do a video on private equity ?

[@sohaibsiddique7988]

awesome guy with awesome explanation of such a complex topic

[@bekhzodyuldashev1645]

Good Explanation thank you Tim! Why 20% very good conclusion! and 5% - 10% of portfolio really should be for spicy taste!

[@Who-yo3xh]

Thanks very informative

[@benderbendingrofriguez3300]

Hi there MoneyWeek, could you make a video where you explain what is a Holding company?

[@carltadgut1]

Excelent lecture thank u very much

[@grovegreen123]

excellent video and explanation

[@SylasHype]

Well explained! Thank you FYI If you light from a angle there will not be huge blinding spots

[@HIGHzONzLIFE]

loving this guy lol !

[@vahehovhannisyan6981]

yeah he is funny isnt he) like superclever nutty professor)

[@ohmfreak1294]

he loves u too!

[@keno9964]

Another great video thanks.

[@alejandramonzoncortarelli4865]

Thank you

[@robbiemcghee5322]

Excellent video. Thanks

[@jennyeyles63]

really good

[@damianos1122]

Hi, I tried watching this video but there is no sound available could you fix that please?

[@BrendanPramjee]

This is a great video! #Knowledge dropped Tim!

[@yydd2001]

you are awesome salute from canada

[@john-blair]

Excellent video. Great explanation of Hedge Fund. Ouch that 2 and 20% fee! Loved the sneaky early radio football match result sold as an "Arbitrage" strategy!

[@Mister.Unknown]

My man Tim "We've got a video for that too" Bennett

[@dogestranding5047]

A hedge fund is essentially an investment partnership. They don't have to be traders; some, like William Ackman or Seth Klarman are value investors.

[@JerryJrsGarage]

What's it called when you invest in a hedge funds fund acc? They have smaller entry fee than making an 1mil payment into a hedge fund investment?

[@jordanf8326]

It is called a fund of fund. A fund that invests in other funds. It is a decent way to initiate a hedge fund strategy but the extra layer of fees kind of ruins the alpha of hedge funds

[@sofiastefani]

Thank you!

[@pedromartins3783]

Keep it up,Jose,,!!!

[@kamalashgovindaraj5245]

Thank you sir.

[@virutronresearch5845]

While others' video induces me to sleep halfway through, this guy isn't. He is the Jack Palance of investing.

[@ratikshetty2905]

did not really understand the 130/30 strategy. could you explain that further ??

[@andreasisaakme]

+Ratik Shetty I've recently read in a book that 130/30 just means that the hedge fund trades with a leverage of 1.3 (10% movement results in 13% for example) and that the hedge fund may use 30% of the total funds to open a short position.

[@vanessawardally]

Hey, i would like to start saving my money in a Compound Account. Please can you give me some good examples of a Compound account.

[@JugurthaHadjar]

Frankly Tim, you should get arrested. Your videos are very addictive. I am an Engineer interested in finance, economics, investing, etc; and the way you explain things is brilliant. You make things as beautiful as a Dickens book. For me, that's the important part: The concepts. The "Why" of things. Your analogies are just amazing (P&L, B/S and Cash flow, the snap shots as opposed to the "story". It helps in ways you may not even suspect.) Thank you Sir!

[@vitordeholandajo156]

Excellent.

[@kehtang]

im also interested in how index funds work:)

[@ivandracavalcanti9714]

So.. macro strategy is basically betting or investing in commodities? Anyone help please

[@fnihp30]

Regarding the "football arbitrage" strategy you initially spoke about, isn't this considered insider trading? Or can this strategy only be leveraged with "unregulated" hedge funds?

[@TheSalih786]

Brilliant video---like all your others.I think you are an amazing teacher.Do you perhaps know of any hedge funds that practices islamic finance?

[@liafw667]

Tim you are a God.

[@farsitemedia4617]

great video

[@TheMathewkeating]

great Video Tim, I would like to ask a question. Was LTCM a hedge fund that got bailed out?

[@deepchowdhury5360]

Yes they were

[@ppumpkin3282]

They weren't bailed out by taxpayers, they were bailed out by banks.

[@rashalghamdi]

Great videos

[@MuandLe]

should have subscribed to this channel long time ago

[@nicoleyin4444]

can u make it succinct???

[@arthurd3667]

I love how you speak, the whispering gives me ASMR feeling down my spine, all while learning about hedge funds. Thank you Tim

[@MoneyWeekVideos]

Hi - try khanacademy for a different choice of accents! Cheers Tim.

[@campbellmorrison8540]

Best explanation of betting I've seen. Money ie store of value is real but these structures are nothing more than betting and now with the size of these funds, manipulation of the money market. The whole idea of a money market is the root of the problem, these funds do nothing to add to "value" they leach the value!

[@arturoborges9440]

Let me ask a question. Let's say I want to open a real estate investment fund. We are going to do a $10M fund to invest in 2 different multifamily projects as institutional investors. The sponsors/operators of those projects already charge asset management fees for the project itself, so, how do we, as the investment company/institutional investor, charge our management fees to our investors as well? Do we negotiate with the sponsor for them to charge a lower fee, do we simply charge our fees and if the numbers make sense, they make sense and that's it? I guess my question would be; In many investments institutional investors make, they are not necessarily the managers of the investment itself, there's another company actually managing the day-to-day operations, and the investment fund/institutional investor simply deploys that capital to the deal and "manages" the investor' money, but not the asset... Is this something that happens and it's completely normal? And if so, how do you structure that and the fees and everything?

[@MuandLe]

I like your voice fluctuation when you explained that "they tend to be quite secretive" Good video.

[@flashfire201robloxlegosand8]

this guy is the key to insomnia.

[@timosarchiveextra9008]

lol

[@AdA-rl4eo]

Where’s this guy gone.. gotta get him back on the channel

[@TheBooban]

Nice shirt!

[@InstTaxSolutionsLLC]

This could be a very interesting presentation from a respectable source. However, there is no sound in the video.

[@FahadAlRajaan1]

If you plan on going in the investment banking industry you will need to know about hedge funds

[@GamersTrue]

_Nice_

[@huooful]

9:14 i replayed 5 times at least, didnt get it how the 130/30 strategy works

[@matbatrobin]

Every investor should subscribe this channel!!!!!!

[@johnyossarian9059]

Can somebody please explain more on the 130/30 strategy? How can a fund manager invest a total of 160 when they only short 30? Also, afaik, you need to keep a 150% margin in the account to initiate a short. Meaning in this example the fund manager needs to deposit 45 to initiate a short of 30?

[@timothyjwelch91]

When you short, you are essentially selling an asset you don't have yet for cash. So, if you sell the asset for 30, you get 30 cash and then you can use that cash on the long position. I'm not certain but I believe that large funds can use other collateral to put down for the short bet which allows them to use this method. It's not really possible for the normal retail investor which is exactly what makes it a special fund strategy.

[@ivalinapasse2469]

Didn't notice Packman

[@cscarlton24]

the last trait of US hedge funds is that you need to be an accredited investor to have a stake in a hedge fund.

[@d.b.9746]

Can someone explain to me who finances Investment banks? (Source of funding) I need to answer that in class

[@wardellcoward542]

We (Bank Customers) do. For example, say you put $1000 in the bank, the bank will put 10% ($100) in the Federal Reserve, and the remaining 90% ($900) will be loaned out to the public as a loan; thereby, stimulating the economy. Now, the $900 that is loaned out, 10% ($90) will go to the Federal Reserve and the remaining 90% ($810) will be loaned out to the public - again, stimulating the economy. Then, the $810 that was loaned out, 10% ($81) will go to the Federal Reserve and the remaining 90% will be loaned out to the public.. stimulating the economy. This will be a recurring process. Basically, $1000 that was put in saving will create over $4500 for the economy. There's more to it, but this is how banks are financed. Hope this help.

[@virtuousjoffrey8022]

I am actually interested in studying & majoring in Investment Banking but i'm kinda on the fence about it because I think I don't have a big enough idea about it. can anybody tell me what's it like? hows the work & what degree will put me in the best position to landing an investment banking job? Any help is appreciated , thanks.

[@g1kluang]

degree doesn't mean anything when it comes to investment. you can even start now by browsing through investment and finance videos and learn them from scratch. The best way to learn is start yourself investing in stocks or other commodities such as gold and silver. For degree i suggest you to enroll either finance and investment or actuarial science. just my opinion though hope it helps

[@virtuousjoffrey8022]

JeevS GOne I was actually looking into Economic and Statistics , will that be sufficient or will something like actuarial science give me a clearer pathway into something investments? I actually have some time off before college and i was finding something to do that would be relevant to my career , any advice?

[@xedjflowx]

Warren Currier a rather harsh evaluation of dinuka but you're correct. nobody gets far by asking questions they can easily have the answers to. but, thank you as i'm a finance major right now trying to assess possible opportunities i can take to land me in a hedge fund or investment bank. i've watched a number of videos on youtube and it seems i'm learning more and more every day. i know i'm not anywhere near competent but the article was actually more helpful than the few books i've looked at.

[@MJtheFellowActuary]

Dinuka Malith Have a go at studying actuarial science. We covered a lot of the hedge fund theory in our course

[@jordanf8326]

To become an IB, you most likely need to graduate from an Ivey leagues school.

[@aycaramba9540]

Shhhhhhhhh..... not so loud!!! You're giving our secretive secrets away

[@attangi]

sounds like sherlock holmes in elementar...quite informative i must say...loll

[@phillia132]

hedge funds are often for private investors who should know better than investing in them

[@victorkonsam6836]

What one could expect where the money would be when the comp we invested goes bankrupt because of some news events being made somewhere ,

[@a45alex58]

Not sure if he mentioned it or not in the video, it should have been one of his first keypoints however... Minimum starting capital to join a hedge fund is around $100k in the US. That being said, 95% of hedge funds out there wont accept you unless you have $1M. So if thats you then good luck but im guessing its not the majority here on this video. The way they can justify their managers taking a huge cut is because hedgefunds are trading with 100's of millions if not billions of dollars. This is how your typical fund is able to provide a 30%ish ROI(Return on Investment). If you're part of a very good fund you could be making 60%+ annual ROI, however you will need roughly 50M to even get into these prestige funds. Essentially, its an incredible passive income, so long you do your propper due dilligence on the fund before hand, and have a good few million starting capital, you could be making $500k+ Sitting on your ass all year. LOL.. Kind of funny when you think about it... but It's life folks... The rich get richer the poor stay poor lol

[@Tyson007ian]

what? bro nobody returns 60% a year on average, it's just not possible. They may get it one year if they are really lucky and in a very bull market, in fact 30% a year on average is still stupidly high and no fund has achieved it, fidelity magellan was the closest fund to 30% average return over 13 years (29.something) and it was actually a mutual fund, it's just that the manager was so good.

[@benevolentdictator2315]

The ultimate arbitrage (I call it reverse arbitrage) is using the face value of American Eagle $50 (or $1) coin. By paying $1500 in federal reserve notes for a $50 coin renders the buyer with a $1450 federal reserve note loss; a currency trade loss that can be used to offset capital gains. I say this as hoarding is a horrible idea and by creating a demand for this will thrust this coin in to a value by utility. This also works for gifting.The key is to never reference its medium, rather reference its face value only as it is de facto law prescribed by the US Treasury. A paper federal reserve note has a value by fiat regardless of its medium, paper in this case. A minted coin by the US Mint has a face value by fiat regardless of its medium.

[@prostynick]

Want a sound? Go to youtube dot com /html5 (links in comments are not allowed) and start using HTML5 instead of Flash player, then you will have the sound.

[@buddha6ful]

Hi, have you wondered this program called the Intellitus Cash System? (look it up on google). My brother says it earns people tons of money.

[@ppumpkin3282]

Sounds like "Hedge Fund" is a big misnomer. It's not about a "hedge", although anything may have a hedge.

[@satijsr]

I checked this picture because I got really concerned with the economy and had not a clue what to do. Cash certainly does not mean anything at all any longer. Thus I chose to do a little groundwork and stumbled on Goldiverse. I am just so grateful, I have the ability to change my savings from cash to different currencies, to any precious metal as soon as I like. The governing administration can go and take a jump for all I care. Just Google it Goldiverse.

[@jetliigor]

One Hedge Fund i know promises an annual return of 24%. This year for my own investment portfolio I made a return of 16%. Would have loved to make 24% so there's some incentive to give your money to a Hedge Fund but also many downsides.

[@r3dbullbbs]

The good old times :D