How do hedge fund managers make money?

I know that they charge 2 percent of assets as a management fee, and that they get 20 percent of profits. Usually some cases are different but how do they get the 20. They don't close out all their positions at the end of the year, so what do they do to figure it out?

The 20% isn't only out of realized profits, but also comes out of unrealized profits. The way they are paid is pretty much just changing paper through hands. Most hedge fund managers have most their wealth in the fund and therefore most the performance fee goes back into the fund.

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They all set up their accounts differently, but they usually work out a percentage of what they make for the clients and different bonuses based on annual performance.
It's all on paper at first, but percentage of customers shares is one way they get paid. They can hold or cash them.

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