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> Many quant trading firms make 50%-100% annual returns. The secret is leverage

Hu lol no XD you're way over stating it. While it happens _sometimes_, 50% or 100% is insanely rare, even for the top tier hedge funds.

Most HF work at predefined annual volatility, often in the 7% to 10% range. A typical _top tier_ sharpe is in the >=2 range, we're more talking about a 10%/25% averaged annual returns.

> However, the returns after fees, to the passive outside investor underperform S&P500.

That doesn't even make sense with the figures you posted. Most HF operate under the 2:20 or 3:30 range, sometimes 0:40 for the top 5. If you take a pessimist 10% returns on 10% annual vol, against the S&P 10% averaged returns at 20% vol, you're still double the risk adjusted returns, gross. Factor in 20 to 40% performance fees and you're way above the S&P.




> A typical _top tier_ sharpe is in the >=2 range, we're more talking about a 10%/25% averaged annual returns.

High-frequency low latency trading: Sharpe 10 or higher

Mid-frequency low latency trading: sharpe 4 to 5

Hedge fund statistical arbitrage: sharpe 1 to 2

Hedge fund long/short, event driven, global macro, etc: sharpe 0 to 1

And yes, HFT and MFT scales to billions in annual PnL for single firms.

There’s a reason quant HFT firms pay the most, and are ranked above OpenAI in pay and prestige. Hedge funds are tier 2 in comparison but not bad either.


I think this almost always refer to Renaissance, except that they aren't really a hedge fund the same way (say) millennium are




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