Can anyone explain the difference between the major quant funds? (i.e., Jane Street, DE Shaw, Tower, Citadel, HRT)
It seems like the QR roles are all similar flavor but wondering if anyone knows what distincts them from each other in terms of overall approach.
Based on the most helpful WSO content, here are some insights into the differences between major quant funds, specifically DE Shaw, Two Sigma, and Citadel:
DE Shaw
Two Sigma
Citadel
General Observations
For more detailed insights, you can explore specific threads and discussions on the WSO forums.
Sources: DE Shaw vs Two Sigma vs Citadel Offer Advice, Compensation Structure At Quant VS Fundamental Funds, Compensation Structure At Quant VS Fundamental Funds, Q&A: Joined a top Hedge Fund out of undergrad, Hedge Funds v/s Private Equity: Which industry will survive and thrive in the next two decades?
Main difference is quant market makers vs quant hedge funds.
MMs typically prop trade, take both sides of the market and make money off the spread. Very small profit (cents) per trade, but it adds up. Generally automated trading (nanoseconds), the type that would pay for colocation. In a business as usual scenario, fairly stable, but vulnerable to regime changes. JS, CitSec, HRT, Virtu, Optiver.
Quant hedge funds run a more traditional HF strategy, but augment it with alternative data. Think of using footfall traffic to approximate the health of a retail-heavy business, or paying for satellite footage and running computer vision models to account for inventory turnover. Cit, MLP, P72 Cubist, DE Shaw all do this to some extent. Could be slower frequency and lower turnover than MMs.
The “quant hedge fund” approach you described overlaps with fundamental hedge fund using alt data.
most people think of quant hedge funds as the systematic shops (i.e not doing the fundamental work on the business itself but looking at signals etc)
Cubist, 2sigma, DE Shaw, Marshal wace, citadel etc
Where does tower and rentec fall into this?
Pretty sure fundamentals can and are used as signals too, as part of a wider universe. And these days a shop like Citadel would be running both quant and fundamental pods.
Complete bullshit. Market makers don’t make money off the spread. They take short term directional views and try to earn several ticks on each bet. Trading costs, stamp taxes, etc. make scalping a penny from the spread unprofitable after fees.
I'd say some pure market making is still alive. If you're talking the most competitive equities, sure. No one can make 1 tick wide spreads for a living. Usually there's some discrete regulatory edge people have that enable them to purely market make
I'd bucket into 4 groups. Time horizon of your strats being long (1day+). Time horizon being medium (10min-1day). Time horizon being short + taking. Time horizon being short + making. Most firms can be defined from that. These 4 groups respectively are: quant hedge funds; intraday MFT (all players do this now); HFT; market makers.
Most of the problems you need to solve come from first principles if you think about the challenges of each group
categorization of quant funds 🙏
Magni nulla reprehenderit eos exercitationem consequuntur. Ullam tenetur et ab vel sit natus nisi. Vitae ut magnam quidem aperiam ab dolorem. Ut corrupti ipsum eius placeat aliquid ea consectetur voluptatibus.
Et consequatur harum autem dolorum sit. Omnis illum quia neque molestiae enim velit. Non quis laboriosam ea repudiandae rerum dolore mollitia aut. Eligendi qui voluptate laborum id qui. Illum et recusandae et.
Enim et hic ipsa iste eum. Omnis maiores quae assumenda est magnam eveniet sed omnis.
Aut vitae fuga molestiae culpa eos. Est perspiciatis minus beatae dolores corporis asperiores. Perferendis nihil asperiores ipsam voluptas aperiam molestiae voluptates. Aut expedita sapiente iste optio.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...