Top Hedge Fund Manager Warns Quant Funds are Becoming Utilities

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dealmaker

Top Hedge Fund Manager Warns Quant Funds are Becoming Utilities (eFinancialCareers.com)
If you’re a quant who aspires to work on the buy-side today, you might be tempted by the big money on offer at big funds like Bridgewater or aspire to work for a niche fund like BlueCove. If so, you may want to move soon. One of the UK’s top quant fund managers says quant funds now have such high costs that they’re in danger of changing into utilities. Speaking at today’s Quant Conference in London, Cantab founder and chief investment officer Ewan Kirk said it’s becoming very difficult to set up a new quant fund due to the elevated costs associated with the industry.
 
dealmaker said:
Top Hedge Fund Manager Warns Quant Funds are Becoming Utilities (eFinancialCareers.com)
If you’re a quant who aspires to work on the buy-side today, you might be tempted by the big money on offer at big funds like Bridgewater or aspire to work for a niche fund like BlueCove. If so, you may want to move soon. One of the UK’s top quant fund managers says quant funds now have such high costs that they’re in danger of changing into utilities. Speaking at today’s Quant Conference in London, Cantab founder and chief investment officer Ewan Kirk said it’s becoming very difficult to set up a new quant fund due to the elevated costs associated with the industry.
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Interesting read, but I don't see why a startup fund couldn't just have one or maybe two people handling all of the tech including quant work, devops, data management, etc. Now if we are talking true HFT, that would likely require more staff.
 
fan27 said:
Interesting read, but I don't see why a startup fund couldn't just have one or maybe two people handling all of the tech including quant work, devops, data management, etc. Now if we are talking true HFT, that would likely require more staff.
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Having worked on high availability systems it is infeasible to have one or two people handling the technical side. You need round-the-clock availability via something like PagerDuty, which means you need to have a pager rotation such that no one is overworking (generally, you want to give someone an easier day the day after they run a 24 hour pager marathon). Each of these sectors of your tech stack will have specialists.

This goes double for the IT side, where you'll need more 24 hour availability for hot swapping hardware, diagnosing network issues (which requires specialists since it's all very expensive fiber), backups, etc.


The startup costs of a true quantitative fund are astronomical. If you include your staff, which all must be highly paid, it becomes quite a money sink. These aren't the halcyon days of Renaissance et al. Today's quant funds are running extremely sophisticated time sensitive arb strategies. The kind where you can't wrap every single duty into a few smart folks.
 
gaussian said:
Having worked on high availability systems it is infeasible to have one or two people handling the technical side. You need round-the-clock availability via something like PagerDuty, which means you need to have a pager rotation such that no one is overworking (generally, you want to give someone an easier day the day after they run a 24 hour pager marathon). Each of these sectors of your tech stack will have specialists.

This goes double for the IT side, where you'll need more 24 hour availability for hot swapping hardware, diagnosing network issues (which requires specialists since it's all very expensive fiber), backups, etc.


The startup costs of a true quantitative fund are astronomical. If you include your staff, which all must be highly paid, it becomes quite a money sink. These aren't the halcyon days of Renaissance et al. Today's quant funds are running extremely sophisticated time sensitive arb strategies. The kind where you can't wrap every single duty into a few smart folks.
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I think it really depends on the type of trading that is occurring. Super low latency requirements for HFT are going to require a massive amount more infrastructure than running lower frequency strategies. I know a guy who runs a fully systematic FX hedge fund and it is a two man operation and they are trading 24/5. Also, with lower frequency strategies you can run your algos in the cloud which makes things easier.
 
dealmaker said:
Top Hedge Fund Manager Warns Quant Funds are Becoming Utilities (eFinancialCareers.com)
If you’re a quant who aspires to work on the buy-side today, you might be tempted by the big money on offer at big funds like Bridgewater or aspire to work for a niche fund like BlueCove. If so, you may want to move soon. One of the UK’s top quant fund managers says quant funds now have such high costs that they’re in danger of changing into utilities. Speaking at today’s Quant Conference in London, Cantab founder and chief investment officer Ewan Kirk said it’s becoming very difficult to set up a new quant fund due to the elevated costs associated with the industry.
More...

To echo @fan27, my first reaction after spending some time at a large fund was to ask my boss: "So, we don't really need this many people do we...."

Not too long afterwards, they announced layoffs. When I went back to visit, the department I had left was anemic.
 
nooby_mcnoob said:
To echo @fan27, my first reaction after spending some time at a large fund was to ask my boss: "So, we don't really need this many people do we...."

Not too long afterwards, they announced layoffs. When I went back to visit, the department I had left was anemic.
More...
Where have you been? Haven't seen your posts lately.o_O
 
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