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Thank you for doing this.
Are quant funds (Two Sigma, Citadel, AQR..) just a hype?
Do you think being a quant is becoming commoditized?
Why are hedge funds using quant strategies under-performing so embarrassingly in recent years
not OP but if I may: I think your questions are far too generalised. You ask whether quant funds are merely 'hype' and point out the fact that many have underperformed. Of course looking at the mega quant funds you mentioned who have gigantic AUM will paint a pretty underwhelming picture - these are guys who raised billions on the back of some very strong performance in the past, and as a result are no longer as nimble and will likely never reach the same level of returns they once did. Sure some can still get you an ok number somewhat consistently by using some trend following stuff, but they'll likely never get you a crazy return again. Their management doesn't care about this since they're making so much money from the 2% mgmt fee.
If you are more familiar with the space and start to look for the smaller shops which don't have the same degree of capacity issues, there are certainly strong funds to be found (yes even in Q1 this year).
Same answer re the commoditised question - absolutely at the bigger shops, maybe/depends at the smaller ones.
It's been a crazy past few weeks. I've never seen this kind of volatility since back when I was trading equities and Getco's algos blew up in 2012 or 2013. I can't remember exactly what year. but that was only for a day or two. Anyway, I understand why a lot of hedge funds blew up with their relative value strategies with correlated instruments breakout down and diverting to unprecedented levels. Typically in this kind of environment, would quant strategies focused more on intra-day momentum, reaping ticks be more advantageous? Is this common or sought for compared to RV strategies? The point im getting at is these mega hedge funds took huge losses and these PMs are no rookies. I feel like realizing PnL from small tick moves and going in and out all day is safer. I mean the transaction cost might be a burden but I feel like overall, as long as you're right most of the time, it would be a better bet? The point I'm trading to make is these PMs are no rookies and they took a huge loss. Typically RV strategies don't tend to do well during market turmoil. I've created an algo where it takes advantage of intra-day mean reversion, scalping ticks in and out and I just feel like what I'm doing would be a safer bet being as long as there is a volatility, I will always make money. Of course, what I'm doing is not scalable to manage hundreds of millions but I just feel like it's safer. Yes, the transaction cost would be a burden but as long as I'm net positive, why not?
Have to double post because my revised comment is not saving down.
It's been a crazy past few weeks. I've never seen this kind of volatility since back when I was trading equities and Getco's algos blew up in 2012 or 2013. I can't remember exactly what year. but that was only for a day or two. Anyway, I understand why a lot of hedge funds blew up with their relative value strategies with correlated instruments breakout down and diverting to unprecedented levels. Typically in this kind of environment, would quant strategies focused more on intra-day momentum, reaping ticks be more advantageous? Is this common or sought for compared to RV strategies? The point im getting at is these mega hedge funds took huge losses and these PMs are no rookies. I feel like realizing PnL from small tick moves and going in and out all day is safer. I mean the transaction cost might be a burden but I feel like overall, as long as you're right most of the time, it would be a better bet? The point I'm trying to make is these PMs are no rookies and they took a huge loss. Typically RV strategies don't tend to do well during market turmoil. I've created an algo where it takes advantage of intra-day mean reversion, scalping ticks in and out and I just feel like what I'm doing would be a safer bet being as long as there is a volatility, I will always make money. Of course, what I'm doing is not scalable to manage hundreds of millions but I just feel like it's safer. Yes, the transaction cost would be a burden but as long as I'm net positive, why not?
easy one: - if you are serious in HFT/market making is kdb c++/java and a bit of python - if you are serious in quant funds: probably the same mix, with a bit of mongodb/postgres
1) both pretty much all (with people monitoring it) 2) python is the standard pretty much everywhere for r&d (someone is using julia, but I have never tried), production is c++/java/go
400k out of college is fake news, it's possible to get 1 time of your salary, which is similar to IB comp
quant trading is different from quant pricing, the former is heavily biased towards stats, the latter is more fin math.
I think a tech career is comparable nowdays (as entrepreneur even better), but you don't get the thrill of money mgmt. I do a lot of cool stuff in fintech, but the thrill of being right (and making money as second derivatives effect) is not comparable.
Quants are typically not business ppl, the ones who are business ppl too are pms. It's a niche field, my advice is always to check what's going on in the real economy, do side things to keep your brain ready for everything.
Downside is you have 10 years experience (probably around 35) you are not a pm, recruiters want researchers with max 3 year experience, you are probably screwed.. It's like IB if you don't make MD you are not going to stay forever VP or Director...Plus the industry is shrinking so, there are less opportunities going forward
hedge funds is a tough career, quant is the same, the fact you might find a job doesn't mean you are going to stay a long time in the game, there's a tremendous luck component (ie your shop perf, you pod perf, your boss, fund raising regime). I recommend it only for the ones who really love mkts, if you chase only the money a developer career gives a better risk adjusted return.
depends on the where you can find promising data sources, information is key.
I would diversify across industries that are structurally different (eg capital vs human intensive industries, tangible vs intangible assets sectors, etc.) to get a bit of diversification.
Playing tactically, now health care/tech will have a new wave of capex, it means more winners and losers, you need to be there.
The edge in this business is easy (in theory): right data (typically quite expensive so few could get it), decent team to digest the huge information load, maximise capacity-constrained ideas (eg you have an edge on 20 mid-size stocks, you can deploy 50m there max, don't grow the book there, just focus on another niche) like the multi-pm platforms do. In order to execute what I describe you need one specific thing: sticky money (that nobody has).
Ppl think the edge is in strategy/team/technology, they are all wrong... The edge is sticky money, once you have it you can have a budget like a proper business for 3 years (in hfs almost all plan on a yearly basis..), pay for all the data you want, build the tech you want (nowdays very commoditized), put together a top team in 9/12 months, For all of this you need 10/15m roughly to start, that means you need easily ~1b aum from day one assuming you are lucky enough to get locked capital for 3 years with drawdown exit clause, this is the real edge to survive in the industry, the rest is story telling...