Top quartile returns in HF space
I'm sure this is an impossible question given the variety of different HFs / strategies but what is considered 'top quartile' for HFs in terms of net IRR? ~15%+ net IRR? ~30%+ net IRR?
I'm sure this is an impossible question given the variety of different HFs / strategies but what is considered 'top quartile' for HFs in terms of net IRR? ~15%+ net IRR? ~30%+ net IRR?
+57 | Looking for a Fund Manager to partner with to start a new fund. | 28 | 15h | |
+33 | How to destress at Pod HF? | 16 | 1h | |
+25 | Any R course recommendations? | 14 | 2d | |
+23 | Starting Personal Account | 12 | 4d | |
+20 | Track Record Expectation For PM's | 28 | 6h | |
+16 | HF perspective on Google (Alphabet) | 5 | 1d | |
+16 | Which Funds focus on timing the broad market rather than L/S individual equities? | 10 | 5d | |
+15 | How extroverted is the junior MMHF job? | 5 | 1d | |
+14 | Path Dependency in Investing Careers | 1 | 6d | |
+14 | Recommend Pass for MM HF Case Study | 4 | 2d |
Career Resources
.
Depends wildly on the fund and the mandate. Market neutral funds vs. global macro funds vs. long-biased funds vs. quant funds all have different risk/volatility/correlation profiles.
Rather than think in IRR terms, you need to think about uncorrelated returns and volatility. A fund with a mid-single digit annualized return profile with low volatility that is actively anti-correlated to equity markets is an incredible fund. A fund with a mid-teens annualized return profile but high volatility and a beta close to 1 is far less attractive.
If you're able to share, what are some funds in the former bucket? (MSD annualized return profile with low vol that is actively anti-correlated to equity markets.) I've never heard of any funds being able to raise significant AUM with MSD type returns.
That makes sense - would you have a general breakdown by strategy e.g., macro funds you hope for XX%+, market neutral you hope for consistent high single digits, etc.?
Thank you - really appreciate the response!
I can't speak to quartiles--I don't have a lot of data on hand, but I'd call the following annualized returns "respectable," based on a non-scientific sampling. Don't place too much weight on these numbers, as I'm sure other people are smarter than me on this topic:
-Multi-manager market-neutral: HSD, with limited volatility and ~0 market correlation
-Single manager long-biased: market returns +2-3ppts, with a beta of 0.7 (implies alpha of 5-6ppts net of fees, if the market compounds at ~10%)
-Macro: HSD, with limited volatility and low market correlation
-Quant: A 1.5+ Sharpe ratio is pretty good. Best funds are >2.5, but are highly capacity constrained to maintain that Sharpe. The structure of most quant funds is that their models show they can achieve a certain Sharpe ratio, and then they set the volatility according to what they think their clients want. So a 1.5 Sharpe strategy could be a mid-single digit returning ~0 risk strategy or a mid-teens modest-risk strategy, depending on the mandate.
Aut asperiores quis quia deleniti voluptatem. Consequatur iure laboriosam ut sint pariatur nesciunt facere. Et similique magni debitis alias repellendus odit. Voluptatem laudantium corporis consequatur vitae expedita molestiae sed. Nobis natus laboriosam deleniti dolorem.
Magnam natus reprehenderit autem nihil architecto aut. Ipsa nihil enim recusandae quia aut. Voluptates est aut repellendus mollitia dolore magnam quae et. Facere quam voluptatibus velit doloremque quos.
Sed sit illo autem illo. Soluta ut maiores adipisci perferendis eius. Sit et nemo recusandae voluptatibus. Aut officia vel qui sed ad quis quia minima. Ducimus nesciunt et expedita sunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...