What are the two components of the typical 'two and twenty' hedge fund compensation model?

Answer

Management fee on AUM and performance fee on profits

Hedge funds compensate portfolio managers under the 'two and twenty' model, meaning a 2% management fee on assets under management and a 20% performance fee on profits generated above a hurdle rate.

What are the two components of the typical 'two and twenty' hedge fund compensation model?

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