A sense of frustration among hiring managers was felt across the board at last week’s AI and Data Science and Trading Conference in New York. The traditional metrics used to fill high-paying seats at hedge funds – prestigious degrees, GPAs and the ability to act the part – have failed to identify capable data scientists and quantitative engineers that are now the lifeblood of many investment firms.
“We need to get to the point where we can say: ‘I don’t care about if you went to college, I’m going to give you data and see what you can do with it,’” said Sarah Hoffman, vice president of AI and machine learning research at Fidelity Investments. That’s exactly what’s starting to happen. Hedge funds that are sick of seeing Ivy League prospects turn into duds are launching competitions where people from underrecruited corners of the world can battle each other in an effort to literally “win” the job.
Connecticut-based WorldQuant is among several hedge funds leading the way. Registration for its second annual International Quant Championship (IQC) just kicked off earlier this month. The competition gives students access to its web-based simulation platform, WebSim, to develop and backtest predictive models. Equity positions and expected returns are simulated, and individuals and teams are scored based on the performance of their “alphas.” The competition starts on the university level, with winning teams moving forward to regional and national matches throughout the summer, and eventually culminating in a two-day live competition to select the winners.
Following its inaugural event last year, WorldQuant offered students five full-time positions and 15 internships worldwide. The competition is fierce. More than 11,000 people participated, representing 1,000 universities from more than 80 countries. An all-female team representing the Moscow Institute of Physics and Technology took the title home to France, edging out teams from China, Vietnam and the U.K. Outside of the IQC, WorldQuant also runs ongoing competitions where winners can become eligible to be consultants as part of the hedge fund’s Virtual Research Center.
WorldQuant isn’t the only fund that has recently begun embracing competitions. Point72 operates a ten-week Investor Semester Challenge, where students play the role of hedge fund manager by cultivating simulated portfolios, including buying, selling and shorting market assets. The five top performers in each region (U.S., Europe and Asia) are invited to one of Point72’s global summits – the first step of the firm’s student recruitment process that feeds into its internship program and Point72 Academy training program. Those who “graduate” from the program are then offered full-time analyst positions at the firm. If nothing else, the investment challenge can help potential applicants cut the line. This year, the academy received 12k applications for around two dozen spots.
Then there’s the Stocks Debate Challenge, an online video-based competition that rewards top performers with a job interview at New York hedge fund Apex Capital Holdings. The competition, first launched last year, is a response to the “massive inefficiency in the way the industry currently looks for talent,” said Alexey Loganchuk, founder of program co-sponsor Upgrade Capital, which partners with financial firms to screen and develop traders.
Of course, all hedge funds still recruit through traditional channels. But in-person interview processes are beginning to mirror the competitions. Sameer Gupta, head of data sourcing at Point72, said last week that he isn’t a fan of traditional interviews – or resumes, for that matter. Instead, he “throws [candidates] in the water” with projects and tests to see what they can actually do.
The quantification of hedge funds is starting to create a new hiring dynamic – one that appears more meritocratic. A number of speakers at last week's conference suggested that hackathons and other competitions are only going to become more common as investment firms have grown tired of the results they are finding from traditional campus recruiting.
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