It's a bit disingenuous to say 1/4 are getting rich from investing. They are getting rich because of the leverage embedded in the standard 2-and-20 payment agre

It's a bit disingenuous to say 1/4 are getting rich from investing. They are getting rich because of the leverage embedded in the standard 2-and-20 payment agreement where the hedge fund managers get 2% of assets under management and 20% of profits above some threshold. Plenty of not particularly good hedge fund managers get really rich because they can convince wealthy institutions to give them money. The VC industry is the same way. Most funds' returns are poor, though there are obvious exceptions, just as there are in the hedge fund industry. Edit: the leverage is that the GPs (general partners) usually only put up 5% max of the total assets under management (the rest comes from the LPs (limited partners), the pension funds, endowments, high-net worth individuals, etc. invested in the fund) but get 20% of the profits.