Big money comes from volume. Let's say a hedge fund manages $100 million. You have profits at an average of 20% yearly (before fees), you charge the usual 2/20 commission. You get $4M management, and $8M performance fees. That's 12 million, suppose your operating expenses are covered by the $4M management fee. Then you get $8M Now suppose you trade retail with $500k (note that few retail traders have 500k to trade), and make 100% profits per year (even fewer traders CONSISTENTLY double their money every year), withdrawing all your profits, you get 500k Compare: $500k vs. $8M, which would you prefer?
You are correct. Yupe, you have to get enough suckers to believe in you... ...or you get your fund into some big corporation's 401k account and you will get suckers by default.
More fair question should be which is harder? Raising $100 million to run your own fund? OR Making $500k trading retail from $500k account?
You need less profits with other people money. 20% for a hedge fund, are quite good returns. 20% yearly on a $100k account, and you get $20k, not even enough to pay bills.
On 100 million with 20% profit, its 2+4=6 million not 12. If you are good enough to make 20million for other people, you can make 6million for yourself. Just use leverage and build up your 500K account over three or four years.