Editor’s Note: Today’s article shows how the smart money is concentrating in AI and tech stocks. Our colleague Robert Rapier is hosting a free live briefing this Tuesday, June 30 at 3:00 PM ET on a different way to profit from the same boom — by owning the essential-service “toll booths” every data center and AI company has to pay through, regardless of which technology wins. Free report included when you register. Save your seat here →

Have you ever felt like there just weren’t enough funds to choose from? Neither have I. Not with an endless list covering just about every niche, index, strategy, and asset class imaginable.

Want to zero in on recent spinoffs and IPOs? Or bet on emerging markets agriculture? Or mimic the portfolios of well-connected members of the U.S. Congress?

There’s a fund for that.

Fidelity Investments alone manages 40 domestic equity funds, 25 international funds, 47 sector funds, 50 bond funds, 79 asset allocation funds, 31 index funds, and 31 money market funds. And that’s just from one fund family.

Go to a popular online brokerage like E*TRADE and search for mutual funds, and you’ll be presented with an extensive menu of 8,000 available options. We have the entire investment world at our fingertips – well, almost.

There is a hidden pathway that you won’t find at your favorite brokerage. That’s because these secretive vehicles are only available to a few privileged individuals. While the benchmark S&P 500 posted a respectable 18% return last year, many of these exotic funds delivered thousands of basis points more.

TCI Fund Management chalked up a healthy return of 27.8%. Run by activist investor Chris Hohn, the fund banked $18.9 billion in gains on concentrated positions in stocks like GE Aerospace (NYSE: GE). It has now pocketed $40 billion (net of fees) for investors over the past three years.

Bridgewater Associates’ flagship Pure Alpha fund delivered a 34% return. Founded by the legendary Ray Dalio back in 1975, the Manhattan firm has earned $79 billion for shareholders since inception.

Both trailed Apis Capital, which rode a combination of long and short positions to a powerful 55.1% gain.

You may not have heard of these hedge fund shops. But they quietly made a fortune for their investors. Anyone with a $1 million stake (most have much more on the line) would have earned $270,000, $340,000, and $551,000, respectively.

Combined, the top 20 funds pocketed $115 billion in gains in 2025. That was quite an encore from the $94 billion aggregate profit in 2024. Which followed a gain of $67 billion in 2023. Having tracked hedge fund performance for well over a decade, I can tell you that each new year brings a fresh crop of outsized returns.

Some of the leaderboard names are new; others like D.E. Shaw and Bill Ackman’s Pershing Square Capital make the list year after year.

These brilliant tacticians generally avoid the limelight and tend to live rather secretive lives. But you might be familiar with some of their playthings. David Tepper at Appaloosa Management bought the NFL’s Carolina Panthers. Steve Cohen owns the New York Mets.

These men (and women) didn’t rise to the top by sheer accident. Bill Ackman graduated magna cum laude from Harvard. Jim Simons received a bachelor’s degree from MIT and then a PhD in Mathematics from Berkley. David Shaw was a double major in math and applied physics who became an Ivy League computer science professor. Since conquering Wall Street with quantitative trading algorithms, he has begun toying with computational biochemistry.

Smart cookies. Generous philanthropists as well, returning billions to a variety of worthy causes.

How do they do it? Well, the inner workings of hedge funds are something of a mystery to most. On the surface, they are pooled investment vehicles like mutual funds. But any similarity ends there. Hedge funds typically use speculative (and often arcane) tactics and strategies to reach their goals. And they utilize some rather exotic instruments, like credit default swaps and other derivatives.

They can engage in short sales or make leveraged foreign currency bets. Some focus on spinoffs, bankruptcies, and distressed credit. Others use options spreads and straddles to profit from implied volatility. There is a whole class of convertible bond arbitrage funds that “delta hedge and gamma trade” to exploit pricing inefficiencies.

Of course, quantitative computer trading algorithms are a popular tool.

The hedge fund industry attracts some of the best and brightest talent. Million-dollar bonuses will do that (even junior analysts often pull in $300,000 salaries). And considering these shops have been entrusted with $5 trillion in assets, they have no shortage of financial resources.

But they aren’t for everyone.

Deemed risky, opaque, and sometimes illiquid, hedge funds aren’t really meant for ordinary investors like you and me. We are the hoi polloi. These funds are invitation-only, reserved for “accredited investors” that meet specific income and net worth requirements.

Shareholders (usually referred to as limited partners) must hand a minimum of $1 million just to get in the door. And they are charged exorbitant fees. The typical arrangement is an asset management fee of 1% to 2% plus a performance fee of 20% of any profits.

Can you imagine a mutual fund investor earning 10% one year being forced to surrender 2% in fees and another 2% in profit sharing? That wouldn’t fly.

To be sure, these strategies don’t always work. Some backfire spectacularly and sustain heavy losses. But wealthy investors and institutions open their checkbooks expecting big results. And they often get them.

Stanley Druckenmiller’s Duquesne Capital Fund famously delivered 30% average annual returns for thirty years.

While the S&P 500 tanked 18% in the 2022 bear market, Citadel’s flagship Wellington fund climbed 38%. It has outrun the S&P 500 nearly 15-1 since inception.

In 1988, MIT math professor and NSA codebreaker Jim Simon’s Medallion Fund was created to exploit tiny trading patterns using mountains of data and powerful computer modeling. By 2018, it had produced astronomical annual returns of 66%… turning $100 into $2.1 million.

But again, this is an exclusive club. In fact, SEC rules prohibit hedge fund managers from advertising to the public – even their websites are restricted. Applicants are asked to fill out a detailed financial resume listing stock positions, real estate holdings and other assets. With few exceptions, these funds are available only to pre-screened investors.

But there is a way to put your money on the same side of the table as the most affluent investors, as well as college endowments and other institutional investors.

You see, hedge fund buy/sell transactions (and current portfolio holdings) are in the public domain. They must be disclosed quarterly via SEC 13-F filings. In other words, we can peek over the shoulders of these out-of-the-box thinkers and see which stocks/sectors have caught their eye.

I run such checks periodically, scrutinizing dozens of top-performing hedge funds and focusing primarily on high-conviction picks. But there’s an easier way.

Check out the Goldman Sachs Hedge Industry VIP ETF (NYSE: GVIP).

Structured like any other ETF, GVIP provides access to a broad basket of 50 stocks for a thin 0.45% expense ratio. But this isn’t your run-of-the-mill index tracker. Using proprietary research, the portfolio is strictly reserved for stocks that commonly appear as top-10 holdings across the hedge fund universe.

That includes Uber (NSDQ: UBER), one of Bill Ackman’s favorites. And chipmaker Marvel Technology (NSDQ: MRVL), which occupies a key slot in Ken Griffin’s Citadel fund. The technology and communication sectors account for about half of GVIP’s portfolio, with the rest of the $570 million in assets spread among the financial, industrial, consumer discretionary and healthcare fields.

Piggybacking on hedge fund moves, GVIP has chalked up a market-beating return of 38% over the past 12 months. Longer term, the fund has nearly quintupled a $10,000 stake at inception in 2016 into $47,000 today.

Following hedge fund moves into AI stocks like Marvell Technology is one approach to the AI buildout. Our colleague Robert Rapier has spent decades in the essential-service sector and sees a quieter angle: the power, grid, and pipeline infrastructure every AI company has to run through — income businesses that collect regardless of which AI winner emerges. He’s laying out the full strategy in a free live briefing this Tuesday, June 30 at 3:00 PM ET, and will send you his new report, The AI Toll Booth, when you register. Save your seat here →