Citadel returned 17% last year, which indeed outperformed SPY's 23.4%. At this point, many people start saying, "If institutions can't do it, retail investors might actually make more profit by trading on their own." I don't deny that some trading experts do perform better, but this comparison actually hides a significant cognitive blind spot.

Hedge funds and retail investors pursue fundamentally different goals. You and I might aim for high leverage and big returns, but the logic for institutions isn't the same. For established funds like Citadel, the goal isn't necessarily to beat the US stock market index; they focus more on low correlation returns, controlling drawdowns, or pursuing stability in absolute returns.

From another perspective, the performance evaluation standards for these funds are often not benchmarked against indices like SPY. Their metrics might be the Sharpe ratio (risk-adjusted return) maintained above 1, or maximum drawdown not exceeding 10%. From these dimensions, a 17% return with low volatility might already be considered quite an impressive achievement.

So next time you see similar comparisons, consider more about the true goals of both sides—focusing solely on the return figures can easily lead to misjudgments.