If I beat the market by 20% (say SPY generated 0% for the year, very optimistic at this point), and I have allocated $100k to this, I make $20k before taxes.
That's less than minimum wage.
Meanwhile, allocators expect a track record of at least 3-5 years.
Ideally, if I have an asset, I'd like to extract as much revenue as I can.
Hope this makes sense.
Of course, they have to check your not trading a strategy with extreme tail risk, but here it sounds like that's not the case?
Turning a long-only equity strategy into a long/short strategy or an "outperformance" strategy[1] with added leverage can seriously affect the volatility of returns and the risk of ruin so it's really important to understand well before embarking on this, because it will affect position sizing and a bunch of other things. You can indeed bet millions for $100k, but if your strategy has 10% volatility unlevered you can get completely wiped out in doing so whereas the risk of ruin of the unleveraged strategy is far lower.
[1] You could say long/short is where you long some things and short some other things generally whereas outperformance is where you long some things and specifically short an index. So in the latter case you are betting on the outperformance of your picks in particular and in the former you are just saying you have the ability to pick both things that go up and things that go down.