is it possible to achieve 30% return

Quote from traderzhangSan:

is it possible to achieve 30% return
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Yes it is possible to achieve 30% annualized return for long-term. My forex manager has paid for past 9 to 10 years average profit of +35% per year without compounded interest.

If you purchase a good stock you can earn 100% profit in a year. But it is difficult to maintain 100% profit for long-term.
 
Quote from jnbadger:

What kinds of returns does he get now? I'm very suspicious of the experience level.

Goals are another issue all together. If he's up 5% in september, is he going to press harder for the rest of the year? If He's up 34% in June is he going slack off the rest of the year? You need to take what the market gives you in any given year. If he can do 30% year over year, he will be the biggest rock star fund manager in history.

Leverage is another issue. 30% in the prop industry is a joke. With no leverage at all, good luck.

And index pairs? Good god. Impossible. Sorry.
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30% per annum consistently is considered rock star money manager status?

Really? You gotta be kidding me........
 
Quote from traderzhangSan:

a friend is going to start a private fund with $5MM AUM. His target is 30% annualized return. He mostly would do swing trades (holding period from 1 week to several months) and some risk arbitrage (for exampe yield curve spread, stock or ETF paris trading) and take small directional bet in currency and stock index.
He was asking my opinion.

I just wonder if 30% doable for 5MM aum? seems to me most hedge fund cannot achieve that results and AUM of 5MM is too small to have any edge.


any thoughts?
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where is the edge?

if there is one than anything is possible and 30% is very conservative.

if there isn't, then he'll blow up sooner or later.

I'd infer that if you're asking that question in a public forum is because you certainly dont know/have an edge. from your post above, I'd be tempted to say that your friend doesn't have the slightest clue and is trying to convince himself with fancy words that he's a hot shot that will make lots of many, without even thinking about whether he is competitive or not when compared with everyone else in the market. after all, it is zero-sum game and someone winnings are someone else losses.

so in which side of the fence is he going to stay with those strategies?

many top hedge funds use risk arbs and only of few of them make money out of it, so go figure what the odds are. when it comes to swing trading, well, that's like playing roulette. 50% chances and cross your fingers baby because last time I missed. when it comes to pairs trading, bare in mind that Deutsche Bank quant team in charge of CROCI algo has lost money in the last three years, so go luck with that. maybe their PhD's are plain stupid and your friend is not.

I dont want to put your friend down, but again, the question is where the edge and how solid it is.
 
An annual return of 30% is very good, that is what the top hedge funds in the world is making.

Most around here on ET are loser day traders that don't know jack shit about real trading and managing money. Lots of nonsense about prop, 100% is easy, etc.
 
Quote from Gcapman:

30% per annum consistently is considered rock star money manager status?

Really? You gotta be kidding me........
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Started in 1982 by James Simons, Renaissance currently has more than $15 billion in assets under management. Since 1989, the company's $5 billion Medallion Fund has averaged 35% annual returns,after fees, and the Medallion Fund is said to be one of the most successful hedge funds.....

Are you managing > $ 5 billion averaging 35 ? If so, you may be named "rock star money manager"...:)

By the way they earned more than $ 1 billion last year. Source : very reliable, EX RenTec employee....:cool:
 
30% a year is much better doable with small money than big. So 5 MM works in his favor.

Now is it doable with his edge, thats a whole nother thing. What is his edge? Plus, what if his investors leave his fund because his drawdown is 50%, even if the edge is profitable 50% a year?
 
Quote from traderzhangSan:

a friend is going to start a private fund with $5MM AUM. His target is 30% annualized return. He mostly would do swing trades (holding period from 1 week to several months) and some risk arbitrage (for exampe yield curve spread, stock or ETF paris trading) and take small directional bet in currency and stock index.
He was asking my opinion.

I just wonder if 30% doable for 5MM aum? seems to me most hedge fund cannot achieve that results and AUM of 5MM is too small to have any edge.


any thoughts?
More...

The fact that he was asking your opinion suggests to me that he has no chance of consistently making 30% a year and anybody who invests in his fund is a fool. To start a hedge fund you should have a track record of at least a few years of real trades where you know what your edge is and can prove it. Only at the point where you *know* you can make 30% a year (or whatever your target its), and not when you have to ask somebody else's opinion about it, should you start a hedge fund.
 
Quote from rew:

The fact that he was asking your opinion suggests to me that he has no chance of consistently making 30% a year and anybody who invests in his fund is a fool. To start a hedge fund you should have a track record of at least a few years of real trades where you know what your edge is and can prove it. Only at the point where you *know* you can make 30% a year (or whatever your target its), and not when you have to ask somebody else's opinion about it, should you start a hedge fund.
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he doesn't have edge, but he achieved consistent result for 1-2 years using small amount of money.
 
Quote from traderzhangSan:

a friend is going to start a private fund with $5MM AUM. His target is 30% annualized return. He mostly would do swing trades (holding period from 1 week to several months) and some risk arbitrage (for exampe yield curve spread, stock or ETF paris trading) and take small directional bet in currency and stock index.
He was asking my opinion.

I just wonder if 30% doable for 5MM aum? seems to me most hedge fund cannot achieve that results and AUM of 5MM is too small to have any edge.


any thoughts?
More...

"Possible"? Yes. But odds of averaging 30%/yr for 10 years are around 1:1,000 for professional MMs.
 
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