Matt Levine’s Money Stuff: Whose Money Should You Manage?

Alternatives manager funding models

If you are good at investing, there are two classic ways to make money:

1. You can take your own money and buy stuff that will go up, and then you will have more money; or
2. You can tell other people “hey I am really good at investing,” take their money, buy stuff that will go up, and charge them 20% of the profits (or some other fee arrangement).

The first approach has the advantage that you get 100% of the profits. The second approach only gives you 20% of the profits, but it has the advantages that ...