> 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.
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.