Sure, I'll give some numbers.
Sharpe ratio = (Your return annually - Annual Risk Free rate) / ( Annualized Vol of your portfolio).
BB = Bulge Bracket, basically a Tier 1 Bank (Goldman, UBS, MS, Citi, google the list).
Equities = Stocks.
Delta 1 = If underlying moves by X $, your product/ derivative moves by X $. Basically swaps, etfs, futures, etc.
Now for some numbers: Say you are under a "vanilla" 2/20 structure (which is actually like 10 years out of date but is still listed on all finance websites) where your fund charges a 2% management fee (i.e if you manage 5 mio USD you charge 100k per year for fund cost) and 20% performance rate on your gross above benchmark ( so you take 20% of the return above your benchmark).
Annualized SP500 vol is let's say 18%, your cash return right now is 3.5%. Quick maths gets you to 4 Sharpe is about 75% yearly return. ((75-3.5)/18 is about 4).Under these assumptions, 4 Sharpe return on 5 mio is 3.750mio.
Your performance fee as a HF manager is gonna be 0.715(75%-3.5%) x 0.2 x 5mio = 715k. So 4 Sharpe on 5mio is basically you earning 900k-1mio USD (depends on the jurisdiction for your base, i took like 180k USD for base) as the HF manager.
Edit: For people who don't trade professionally, capacity (i.e how much money your strategy/you as a trader accept before becoming inefficient/losing money) is the big filter. There's a shitload of strats that work at 1 mio USD but completely stop at 2mio or 5mio.
Sharpe ratio = (Your return annually - Annual Risk Free rate) / ( Annualized Vol of your portfolio).
BB = Bulge Bracket, basically a Tier 1 Bank (Goldman, UBS, MS, Citi, google the list).
Equities = Stocks.
Delta 1 = If underlying moves by X $, your product/ derivative moves by X $. Basically swaps, etfs, futures, etc.
Now for some numbers: Say you are under a "vanilla" 2/20 structure (which is actually like 10 years out of date but is still listed on all finance websites) where your fund charges a 2% management fee (i.e if you manage 5 mio USD you charge 100k per year for fund cost) and 20% performance rate on your gross above benchmark ( so you take 20% of the return above your benchmark).
Annualized SP500 vol is let's say 18%, your cash return right now is 3.5%. Quick maths gets you to 4 Sharpe is about 75% yearly return. ((75-3.5)/18 is about 4).Under these assumptions, 4 Sharpe return on 5 mio is 3.750mio.
Your performance fee as a HF manager is gonna be 0.715(75%-3.5%) x 0.2 x 5mio = 715k. So 4 Sharpe on 5mio is basically you earning 900k-1mio USD (depends on the jurisdiction for your base, i took like 180k USD for base) as the HF manager.
Edit: For people who don't trade professionally, capacity (i.e how much money your strategy/you as a trader accept before becoming inefficient/losing money) is the big filter. There's a shitload of strats that work at 1 mio USD but completely stop at 2mio or 5mio.