A.W. Jones famously invented the hedge fund in 1949 by combining the potent one-two punch of short-selling and leverage. He also introduced the now widely adopted 20 percent incentive fee, tied solely to returns. Almost 60 years later, “20” has held as the hedge fund industry’s cut of whatever money it makes for investors: A hedge fund clears a $1 million profit and $200,000 of it goes into the manager’s pocket.
