Institutional investors are not going to allocate capital to a team of one. You can outsource a decent amount of back office functions but you are still going to need to manage some things in house.
Yes, I am aware. But family offices will if you have proper relationships with them (essentially F&F money). You can raise small funds (i.e. $5 to $50m) from family offices.
If you can take 20% of an annual 10% gain on $50m, that's a million a year -- pretty great lifestyle wise for a one person band.
You make a few unrealistic assumptions, and you're ignoring opportunity cost. Small funds charge more like 1 and 10-15%, your example assumes 0 and 20%. You ignore expenses; besides the normal costs of any business, like legal and accounting services, hedge funds usually have a Bloomberg Terminal ($24k/year) and usually other expensive research, as well as expensive compliance and fund administration services. $50mm is a lot of money to raise unless you know a lot of rich people and have an established track record as a good investor. Someone like that can make a very good salary as an employee of an established fund, and not have to deal with the extra hassle of running a business. The flip side is they probably also have a high net worth, and are keeping 100% of the gains from whatever they personally invested. But on balance running a $50mm hedge fund isn't as much of a slam dunk as you might think. The regulatory and investment environment is pushing things to a winner take all situation, where there are fewer, larger hedge funds.
Those are horrible returns, that is borderline nearly unethical. You would have higher returns and pay less than 1% just putting it in the vanguard 500.
