“Rich Formula: Math And Computer Wizards Now Billionaires Thanks To Quant Trading Secrets” is an interesting look at a quant hedge fund (Two Sigma) and that space of the actively managed market.
My favourite part of the article is this sentence, which highlights the irony of a quant fund built on computer science and data science having relatively higher numbers of employees to practically every other hedge fund strategy:
By 2008 Two Sigma already had $4.6 billion in assets and 200 employees, while other similar-size value funds had far fewer employees.
If you’re running a value or growth strategy, you need a PM, a sales team and some analysts – it would be feasible to outsource almost everything else or leverage prime broker relationships for soft billed infrastructure. If you’re running a quant strategy, you need a PM, lots of data scientists, developers, infrastructure staff and it would be a lot more difficult to outsource because of the high frequency you’re executing trades. This is quite a delicious irony.