Quant at AM/LO?
I'm a postdoc in applied math/ML/stats/OR/physics thinking about quant now that US academia is cooked.
A lot of good discussion exists on market makers/prop trading/hedge funds, but not so much about AM/LO. Looking to get some insight:
At most firms, are quant groups relatively new and thus not an established part of the business?
Are they good places to learn, keeping other options open down the line?
What is the value add of quant here? AM/LO offer a particular product, which is different than hedge funds etc. How relevant is quant/systematic investing here, and how does it compare to existing discretionary strategies?
What is the industry trend? Growing or shrinking number of quant groups?
These firms seem to have a different vibe than market makers etc. Do these firms (particularly LO) recruit fresh PhD/postdocs with no finance experience?
Is networking much more important for AM/LO? I have the impression 2s/CitSec/JS have well-defined recruiting pipelines and will grant interviews (relatively) generously. For AM/LO, is networking going to be the essential for getting an interview?
Same interview style as the other guys?
Is quant at AM/LO underrated? No one really talks about it online. If not underrated, what am I missing?
Quantitative roles in Asset Management (AM) and Long-Only (LO) firms are indeed less discussed compared to hedge funds, market makers, or prop trading, but they offer unique opportunities and challenges. Here's a breakdown based on the most helpful WSO content:
Are quant groups relatively new and not an established part of the business?
Are they good places to learn, keeping other options open down the line?
What is the value add of quant here?
What is the industry trend?
Do these firms recruit fresh PhD/postdocs with no finance experience?
Is networking more important for AM/LO?
Same interview style as the other guys?
Is quant at AM/LO underrated?
If you're considering this path, focus on firms with established quant teams and a track record of integrating systematic strategies into their investment processes. Networking and demonstrating your ability to apply your technical skills to investment problems will be key to breaking in.
Sources: So you want to be a Quant?, Ask Me Anything - Buy Side Systematic Quant, Would you rather hire a junior out of IB or LO AM?, https://www.wallstreetoasis.com/forum/hedge-fund/quant-hedge-fund-career-progression?customgpt=1, FT Offer Fundamental vs Quant AM
Quant as is vlookup? Most 'advanced' area in AM LO is in ETFs.
I would classify quant strategies into high, mid and low frequency strategies. The most frequently discussed are high and mid frequency strategies, which exist pretty much exclusively in prop shops or hedge funds. Low frequency strategies (holding periods of weeks to years) exist in both HFs and Asset managers, the difference between those mainly lie in regulation and fee structure (generally no performance fees for AMs, but has greater potential to scale). I will answer your questions in the context of low frequency strategies, regardless of fund type, because I think the discussion of Quant LO AM can sort of be generalized as such. Before doing so, here is a non-exhaustive list of reputable firms that run low frequency, quant LO strategies in no particular order. There are others that run quantamental strategies, but I don't consider them here.
Blackrock SAE, AQR, Man Numeric, Acadian, Winton, GMO, fidelity, panagora, alpha simplex, capital fund management, rentech, arrow street, lazard, pimco, Franklin Templeton, PGIM, Los Angeles Capital Management, robeco, intech, northern trust.
1. No, some are very established.
2. Some of them are, many aren't good and are very non-rigorous, you really have to do your DD and this can be very group dependent. Generally, you can hop between other shops than run low frequency strategies, but to go from low frequency to mid might be a challenge, and pretty impossible to step into high frequency space after having spent time in Quant LO.
3. I see quant and discretionary strategies as being complementary. Quant signals in LO mostly take advantage of small inefficiencies at a large scale whereas discretionary strategies focus on having high conviction. I think in a perfect world quant strategies are less cyclical while discretionary strats are higher risk higher reward. Just my opinion.
4. From my view, it's staying the same or growing slowly. The thing with this industry is you don't need more quants to run a larger strategy because LO strats can be very scalable without performance leak.
5. Yes.
6. Yes, there are less investment professionals per quant group and less resources for interviewing candidates. As a result we give out less interviews.
7. Yes but also more emphasis on fit.
8. The other comment thinking it's all just vlookup and ETFs seems to demonstrate that it is underrated. But mostly I think it's discussed less because 1. it's just a smaller space with less people and less turnover, 2. what you experience can vary so much depending on which firm you end up in.
AQR, Man Group, RenTech etc. these are HFs in my book. You also quote some HF strategies that sit under AM platforms (ie: Blackrock SAE). Truth is there is no proper FO quant career path in discretionary AM LO, unlike HF and prop desks. Where I see scope for quant FO roles is in ETF where AM LO are increasingly deploying capex to recoup some of the outflows out of discretionary.
As I mentioned, I am making generalized comments about quant LO, because what I think OP is actually interested in is low frequency strategies, and in that case he should broaden his scope to quant LOs in both HFs and traditional AMs. Which is why I mixed HFs into that list.
"Truth is there is no proper FO quant career in discretionary AM LO"
I am not sure how you can be so confident in that. You are arguing with someone who is a FO quant in an AM, managed by PMs who are quants. Perhaps you mean there's no clearly defined career path? But that applies to quant LO in HFs as well (career paths of people in both seem very similar to me). So I'm led to believe you don't know the industry well.
Fyi, blackrock SAE is a mix of HF and trad AM strategies. It is not exclusively a hedge fund nor does it only have fixed fee strategies. For example, BDMIX is a mutual fund run by SAE. Same with AQR, which runs a mix of institutional strategies and mutual funds in addition to HFs. The lesson here is, HFs can run trad AM strats and vice versa, it's not as helpful if I just go ahead and only name the traditional AMs that have quant LO strategies.
I can't speak to quant FO roles in ETFs, since I am not familiar with it. Would be helpful if you gave some examples (tickers).
If you really are that interested in non-HF AMs running quant strategies, here are a few more. Causeway capital, American century, Invesco. Each have FO quant roles.
What non-quant AM roles is your role most close to, if at all? Would you say your role is supplementing a particular non-quant AM role, or are quant skills inherent to the broader goal of your position?
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