Comment by dennybritz

I think you're comparing apples to oranges here. These funds manage billions of dollars of client money, which forces them into highly liquid markets with scalable strategies. That's quite different from how individuals or smaller prop funds can operate, trading off capacity for higher returns by trading in less liquid markets or with strategies that are "not worth it" for large hedge funds. If you must manage billions of client money then you are right in terms of competition, but as someone who only trades his own capital, you can see a lot higher returns.