- Quants have gone from a niche practice to a dominant player — the largest and most important hedge funds in the world are heavily influenced by, or completely committed to, computer-run strategies.
- The future of quantitative investing is under question, as a growing group of experts have been calling for more machine-learning techniques to be incorporated in a move away from the models that made so many people successful.
- This year has not been kind to quants, as the volatility caused by the pandemic earlier in the year slammed many systematic funds that couldn’t keep up.
- The power players of this area of finance will be the ones who will guide this ever-important industry subsection into its next phase.
- This list is a combination of long-time, billionaire players, under-the-radar heavy-hitters, and entrepreneurial founders with serious pedigrees.
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The future of quant investing is the future of finance.
Quants are now kingmakers in the $3 trillion hedge-fund industry, with nearly every major fund dedicating ample resources to the space, whether it’s capital for strategies or resources for hiring and data feeds. And these strategies — increasingly popular over the last decade — do not operate in a vacuum.
The rapid — and emotionless — trading done by them have caused investors like billionaires Stanley Druckenmiller and Leon Cooperman to argue that they are warping the markets. Meanwhile, the unprecedented volatility in the markets in March caused many big-name quants to lose money, as their models struggled to keep up.
What quant investing looks like in the next decade will largely be driven by the power players on this list — a combination of billionaire stalwarts, under-the-radar heavy-hitters at big-name funds, and new founders.
And there’s some general disagreement about what the next evolution of quant looks like. Marcos Lopez de Prado, the former head of machine-learning at AQR and a professor at Cornell, believes quants need to get away from models and focus on “nowcasting” — reacting rapidly new data as it comes in. Artificial intelligence and machine-learning techniques have spread across the industry to help digest the reams of data feeds that are the industry’s lifeblood; others are attempting to bring the quant strategies that worked so well in equities to the fixed-income space.
Lopez de Prado, in a recent webinar, said the biggest challenge the industry faces is “how can we make sense of the tremendous amount of data we have today that was not available three to five years ago?”
The power players of the industry are often a part of the firm’s data leadership, if not holding the purse strings of their data budgets themselves. How they process, structure, and clean the data will be one of the biggest differentiators from their competitors.
The talent to do all this, of course, does not come cheap. It’s one of the few pools of skilled workers where the hedge fund industry is not always able to give the most lucrative offer, as top hedge funds often have to compete with Silicon Valley for the best of the best.
The list is also an indication that despite the asset management’s industry outward promise of increasing diversity, the top of the space is still overwhelming male and white. While many of these firms have women building systems and strategies, the leadership of the space does not have much diversity at all.
Ross Garon, Millennium
The long-time head of Steve Cohen’s quant unit joined Izzy Englander’s Millennium in a new role this summer.
Garon, who has known Millennium co-CIO Bobby Jain since high school, will be in charge of the quants for Englander. In his new role, he will oversee more than 25 teams of quants.
Garon has been in the quant space for a while, starting and running his own fund before joining Point72’s predecessor SAC Capital in 2009.
Denis Dancanet, Cubist
A long career in finance — with stops at well-known quant fund PDT and a long stint at Morgan Stanley — preceded Denis Dancanet’s foray into aviation.
Dancanet, the recently announced head of Steve Cohen’s Cubist unit, started a jet propulsion start-up known as Jetoptera, which has several patents. Dancanet will have his work cut out for him, sources have told Business Insider, following up Garon, who was in charge of the unit for — in hedge-fund world — an eternity.
Dancanet does have one advantage though — Cubist employees are not allowed to join Millennium as long as Garon is there, which will help the team keep top talent. Cubist is Point72’s separate quant unit, though Point72 has quants inside its other strategies as well.
Matthew Granade, Point72
Granade, pictured above, is Steve Cohen’s data guru, bringing in expansive — and expensive – datasets from outside the firm so Point72’s portfolio managers can know where a stock is heading before anyone else.
Granade’s title is chief market intelligence officer, and he describes himself on his LinkedIn page as an “experienced business builder at the intersection of finance, advanced analytics, and technology.”
Granade also is a part of the leadership team for the firm’s venture-capital arm, helping make decisions on which private companies the firm will back.
Igor Tulchinsky and Gary Chropuvka, WorldQuant
Born in Soviet-era Belarus, WorldQuant founder Igor Tulchinsky is far from his communist roots.
Tulchinsky founded WorldQuant in 2007 after working for Millennium for more than a decade as a portfolio manager. The firm manages more than $7 billion now, including money for Izzy Englander’s Millennium.
Tulchinsky recently brought on Gary Chropuvka, who led Goldman Sachs’ quant investing unit for years, as president. The firm said at the time of Chropuvka’s hiring that he will be tasked with coming up with the “future of quantitative investing.”
Navneet Arora, Citadel
As Ken Griffin’s top quant, Navneet Arora, is running strategies across the board.
The area he heads up, Global Quantitative Strategies, trades across equities, fixed income, currencies, and commodities, according to the firm’s website. He became in charge of the division in May of 2019.
Arora previously was an executive at BlackRock and Barclays before joining Citadel, which manages more than $33 billion. A source close to the firm said that Global Quantitative Strategies, which feeds into the larger multi-strategy funds, has been positive for this year, when other quants have struggled.
Anne Dinning and Eric Wepsic, DE Shaw
The two people selected from DE Shaw’s five-person executive committee give a sense of how one of the most well-known quants divvies up responsibilities among its leadership team.
While some executive committee members focus on the firm’s discretionary managers or risk management, Eric Wepsic and Anne Dinning have more control over the quant side of the business. Wepsic’s bio states that he’s responsible for the firm’s trading and information platforms as well. Dinning is one of the most well-known female quants in the industry.
The firm’s five-person executive committee — which includes Eddie Fishman, Max Stone, and Julius Gaudio as well — took over the day-to-day functions of the firm from billionaire founder David Shaw over a decade ago.
While the firm has expanded beyond quant strategies to include a macro fund and long-only investments, DE Shaw’s alumni have been a player in the quant world and the world at-large. Famously, Jeff Bezos worked for the hedge fund before starting Amazon, and Two Sigma founders John Overdeck and David Siegel were originally at DE Shaw.
John Overdeck and David Siegel, Two Sigma
Billionaire Two Sigma co-founders John Overdeck and David Siegel have surpassed their first firm, $50 billion DE Shaw, in AUM as they have built what is considered one of the smartest quant managers in the business.
Nearly 20 years old, $65 billion Two Sigma is regarded industrywide as being at the cutting edge of new strategies and techniques, such as machine-learning. The firm’s been able to recruit heavily from the tech world — Alfred Spector, a well-known computer scientist, and former IBM and Google executive, was the firm’s chief technology officer for years.
He was replaced by Jeffrey Wecker, Goldman Sachs’ first data chief, in July.
The firm has admirers in the traditional finance world as well: Longtime Blackstone executive Tom Hill was an early backer and now works as an advisor for the firm, and hedge-fund billionaire Paul Tudor Jones was the seed investor for the pair of quants.
See more: Two Sigma, Goldman, and Citi invested $41 million in data startup Crux Informatics. But the past 12 months has seen the startup churn through execs as it looks to solve Wall Street’s data woes.
Peter Brown, Renaissance Technologies
While Renaissance Technologies’ billionaire founder Jim Simons has been less involved in the day-to-day operations of the legendary firm for more than a decade, one of his longtime lieutenants is still in charge.
Peter Brown has worked at Renaissance — which manages more than $100 billion — for nearly 30 years, joining the hedge fund from IBM.
Brown worked closely with Robert Mercer, who was the co-CEO of the firm with Brown but resigned in early 2018 after reports on his backing of President Donald Trump and his funding of far-right media operation Brietbart. The pair, as described in Gregory Zuckerman’s book on Simons, were essential in building the Long Island-based firm into the juggernaut it is today.
Cliff Asness, David Kalliber, and John Liew, AQR
One of the most outspoken people in the industry, AQR co-founder Cliff Asness is on the shortlist of quant power players.
Along with his co-founders John Liew and David Kalliber, Asness has turned $143 billion AQR into an investing behemoth, with dozens of mutual funds alongside hedge-fund offerings.
Asness, a billionaire, is known for his engaging Twitter profile and penchant for breaking computers when things go awry. He’s also a prolific author and blogger, opening up AQR slightly to the world-at-large.
Matthew Sargaison and Giuliana Bordigoni, Man AHL
Man AHL, the quantitative arm for the largest publicly traded hedge-fund manager in the world, is led by Matthew Sargaison, AHL’s co-CEO and CIO.
Giuliana Bordigoni has been leading AHL’s charge into different asset classes and regions, one of the next frontiers for quant managers. As the head of alternative markets and co-portfolio manager on two different funds, Bordigoni is bringing quant strategies to areas like the bond market. She previously served as head of fixed income for Man AHL.
Sargaison meanwhile has been in his CIO role since 2012, and before that, was in charge of risk at the $36 billion manager. Now co-CEO, Sargaison oversees more than 100 researchers and technologists, according to Man AHL’s website.
David Harding, Winton Group
Billionaire David Harding founded Winton Group with just a couple million in assets more than 20 years, and he has built the quant manager into one of the most successful funds in the industry with $20 billion under management.
The London-based firm is Harding’s second time atop a quant fund — he founded AHL, of which the H is Harding, with two other quants and sold it to Man Group in 1994. More recently, Harding’s been a big donor to Cambridge University, giving more than $100 million last year.
Winton also spun off a company called Hivemind recently that uses machine-learning to help complex datasets become more digestible.
Neil Chriss, Omni Quantitative
Neil Chriss — a former top quant for Goldman Sachs and Steve Cohen — ran his own shop, Hutchin Hill, for years with initial backing from Jim Simons’ Renaissance Technologies.
Hutchin Hill closed with billions in assets in 2017 after a string of poor performance, but Chriss quickly founded a new venture: Omnis Quantitative, which is a hedge fund that is a part of Izzy Englander’s Millennium.
Michael Graves, Nebula Research
A longtime top quant for Steve Cohen, Michael Graves started Nebula Research in 2019 with at least $600 million in backing from Paloma Partners and other investors.
Graves, who worked for SAC Capital and Cubist, brought several members of his team along with him for his new venture. He is no stranger to the start-up game; before working for Cohen, Graves launched several other hedge funds, including Tesseract Capital.
Devon Long, Bridgewater Associates
Devon Long’s title at Bridgewater, the $160 billion hedge fund founded by Ray Dalio, is investment associate, but his responsibilities are much greater.
Long oversees the firm’s systematic trading floor, and co-heads the trading analytics team. The firm says his current focus has been on trade execution, a wonky but important part of any fast-paced systematic strategy.
Long, who joined Bridgewater in 2012, has a technical background, with a computer science degree from Harvard.
Donald Sussman, Paloma Partners
Donald Sussman may not be as famous as other quants on this list, but his early belief in the field has made him one of the most important contributors to the rise in systematic investing.
Sussman, who has run Paloma Partners for decades and is a major Democratic donor, backed DE Shaw with $30 million before anyone knew if these strategies would take off. In recent years, he has backed Michael Graves’ new shop as well as former Citadel top quant Jonathan Graham’s Aquatic Capital.
Anthony Lawler and Ewan Kirk, GAM Systematic
A former Man Group executive, Anthony Lawler is the co-head of the GAM Systematic investment platform and a portfolio manager of the alternative risk premia. Lawler, pictured above, also runs GAM’s multi-asset investment solutions group.
The “cornerstone” of the $3.4 billion GAM Systematic platform is Cantab, the quant fund founded by Ewan Kirk, which GAM bought in 2016. Kirk is the president of GAM Systematic now, and previously was a top technologist for Goldman Sachs in Europe.
GAM Systematic is known for some of its impressive female quants as well. In a list of 50 top women in the industry from last year by The Hedge Fund Journal, two GAM Systematic quants — Linda Gruendken and Camilla Schelpe — were highlighted.
Jonathan Graham, Aquatic Capital Management
A former top quant for Ken Griffin, Jonathan Graham’s Aquatic Capital was one of the bigger launches of the last couple of years when it launched in mid-2019.
He received backing from Donald Sussman’s Paloma Partners, and his firm’s website is similar to that of a Silicon Valley start-up, with a whole page dedicated to the culture — casual office attire, daily catered lunches, and weekly happy hours are mentioned — to attract new talent.