Quants is profoundly transforming the investment industry. The grizzled traders of Wall Street of public perception are being deposed by young, brilliant mathematical minds. As financial securities have become increasingly complex, demand has grown rapidly for people who can use mathematical models to price securities, generate profits and reduce risk – enter the quant.
Quantitative analysis positions are found almost exclusively in major financial centres with trading operations. In Asia, many quants are working in Hong Kong, Singapore, Tokyo, and Sydney, among other regional financial centres.
Quant analysts apply mathematical and statistical models in the sell-side for derivatives pricing and risk management, as well as the buy-side for statistical arbitrage, algorithmic trading and quantitative investment trading. Harnessing the power of computer science and vast data-sets to make investment decisions is no mean feat. Since 1988, Renaissance Technologies has generated over $136.53 billion in SGD in trading profits – more than any other hedge fund in history.
For decades, investors imagined a day when data-driven traders would dominate financial markets. That time has come – the quant hedge fund sector is experiencing significant growth. The growth of Two Sigma, one of the leaders of the quant hedge fund industry, is also emblematic of the shift away from traditional hedge fund strategies. Barclays analysts last summer estimated that quant hedge funds, or quant strategies within bigger hedge fund groups, managed about $682.24 billion SGD.
For the intellectually curious, quants provides applied mathematical and statistical models to the most obscure financial and risk management problems during unpredictable market conditions. In 2018, the algorithms behind trend-following quants struggled to react fast enough to market volatility caused by President Trump’s tweets and US-China trade tensions, alongside other political maelstroms such as Brexit. In response, analysts at JP Morgan have created and coined the Volfefe Index to predict how “a broad swaths of assets from single-name stocks to macro products have their price dynamics beholden to a handful of tweets.”
According to PayScale, the average salary for a Quantitative Analyst in Singapore is $70,638 SGD. The future looks bright for the quantitative hedge fund industry, with $1.36 trillion SGD of assets under management this year – with the sector continuing to grow at breakneck speed it is a great time to be a quant.