The good ones do.
Citadel Securities, Renaissance, Jane Street, HRT, Jump, consistently do 50%+ annual returns over the past 15-20 years. They obviously don’t accept outside investor money.
Now, hedge funds that accept outside money like DE Shaw, Bridgewater and shit, yeah, they barely outperform S&P500 after their fees.
Then at the bottom, you have financial advisors who underperform S&P500 after their fees, but these advisors provide emotional support, so that’s what you’re paying for.
That is only if you consider high-frequency trading investing. Which is very hard to, because on traditional investing timescales HFT is delta-neutral.
I mean, there isn't any evidence other than heresay.
3x leverage on VTI/VOO yields 20% annual return over the past 30 years.
Even you, a passive index fund investor, can do this in your Schwab/Fidelity account.
Now consider algorithmic prop trading firms with 10x, 20x leverage. You do the math.
For reference, most people take 5x leverage on their house (20% down payment).
Because fees as a manager of someone else’s money can be higher than the full amount of the returns if it were just your own money.
Fees on someone else’s capital: 1% of 20% of 1bn = 2m
Returns on your own capital: 20% of 1m = 200k