While many hedge funds continue to struggle this year after a down year in 2015, a significant number of quantitative strategies have had a strong start to the year.
The average hedge fund is still in negative territory for the year, according to data provider Hedge Fund Research, whereas many quants are outperforming. For example, quant hedge fund R.G. Niederhoffer Capital Management’s $731m Niederhoffer Diversified Offshore Fund shot up 18.71% as of Feb. 10. Now, they're hiring.
“There has been a focus on managed futures, systematic global macro and active equity recently that has been attracting some top talent and filling those niche roles that will add to the strategy and research aspects of their [quant hedge] funds,” said Ben Hodzic, managing consultant of quantitative analytics, research and trading, Americas, at Selby Jennings.
“At a more junior level, the ability to code in Python and Java has increasingly been an attractive credential [for quant hedge funds],” he said. “Given the ever-evolving technologies and analytical systems, these languages have fared well above others due to their simplicity and ambidextrous functions.”
Even famous traditional portfolio managers are getting into the quant game, including Legg Mason’s star PM Bill Miller, who is launching Miller Value Partners, a group of quant hedge funds.
Two Sigma is looking to hire a variety of engineering, project manager, program manager, relationship manager, analyst and associate roles in its New York office, as well as a data sourcing specialist, an electronic algorithmic trader (campus hire) and a high-frequency performance operations specialist.
AQR Capital Management, based in Greenwich, Conn., is also looking to hire analysts across various departments, a European markets trader and algo researcher in the global trading division.
D. E. Shaw is hiring engineers, analysts and IT/enterprise systems administrators in its New York office, plus a Latin American markets trader and a corporate development generalist.
Similarly, PDT Partners is hiring New York-based engineers, analysts and systems administrators, as well as developers and quantitative researchers.
So what skills and qualifications are quant hedge funds’ hiring managers looking for?
“Quant funds in particular are looking for the smart, analytical people right out of undergrad – such as math or econ majors from MIT or Wharton, for example – rather than pulling from investment banking or sales and trading floors,” says Crosby Baker, a managing consultant in the financial services and real estate practice at Korn Ferry Futurestep.
Quant hedge funds look for candidates with very strong math, computer science or engineering skills and a quantitative mentality, as well as programming skills, for example, C++, Python and Java.
“There’s a lot of data analytics in tech-oriented roles at hedge funds, and if you have an interest in investing, that will give you a leg up, so you won’t have to translate and learn the language of investing,” Crosby said. “However, that’s not as important as the programming skills that they’re looking for.”
Over the last five years or so, the ability to parse big data and interpret it meaningfully have become a more important part of any financial services tech job, and that’s doubly true of roles at quant hedge funds. They are looking for mathematically minded candidates who can pick out actionable elements from the data and run models.
“People are getting picked up right out of undergrad,” Crosby said. “Quant funds had the pick of the litter previously, but now there’s a lot more competition for math, science, engineering and economics grads.”
That means hedge funds’ compensation will have to remain competitive to avoid losing their best talent.
From candidates’ perspective quant hedge funds are going to be at a higher pay scale rather than working for XYZ bank to do their Basel III stress testing.
“If you’re looking for jobs on Wall Street, you have a mathematical background and you’re analytical, then you’ll be pulled toward a quant fund,” Crosby said. “You won’t have to wear a suit and tie and walk the walk like at other Wall Street firms.
“Quants tend to be more open-minded, because they just want really smart people, so they might have more allure than other roles that would require a similar skill set,” she said.
For candidates right out of an undergraduate programs, quant hedge funds are paying a typical $65k-85k base salary, plus a 100% bonus is likely the minimum you can expect, but by and large they will carry more upside than, say, the bonuses banking analysts can expect.
Looking ahead four-to-five years out of undergrad, quants will be similar to other hedge funds and private equity, maybe a base of $120k, plus a bonus of 150-200% or more depending on fund performance.
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