Empowering Quants and Investors and Democratizing the Hedge Fund Industry with the World’s 1st Marketplace for Quantitative Trading Algorithms
Use your data science skills to make a fortune in your spare time by writing quantitative trading algorithms on Quantiacs.com.
Every single quarter, the Silicon-Valley startup Quantiacs is analyzing and ranking the best performing trading algorithms to determine which lucky data scientists and freelance quants will win investment allocations totaling $2.25 Million USD. The top trading algorithms deploy all kinds of unique and innovative approaches, from machine learning to neural nets to classical economic theory.
Quantiacs.com is a new breed of hedge fund that is applying exponentially advancing technologies to disrupt and democratize an industry that has traditionally been designed to only benefit the most elite echelons of high finance.
The Future of Finance is Quantitative
It’s becoming increasingly clear that the world’s most profitable hedge funds are quantitative, and the future of asset management and investing is quantitative, driven by advanced technologies such as artificial intelligence, machine learning, neural networking, and particle physics.
Quantitative trading hedge funds now manage $918 billion, according to HFR, which amounts to 30% of the $3 trillion hedge fund industry. The money kept flowing into quant hedge funds last year, $13 billion in total, compared to $83 billion that flowed out of discretionary hedge fund managers.
Just last month the world’s biggest asset manager (BlackRock) announced that it’s revamping its investing business to further embrace quantitative trading strategies — and they laid off some 40 portfolio managers. The old-guard of hedge funds was all about a bunch of egos sitting in a room picking investments and believing they are smarter than the next guy. The old-guard is dying, and in its place, a new era of finance is emerging. This new guard is being led by quantitative trading.
The way these quantitative hedge funds work is by employing hundreds of quants — or better known as the rocket scientists of Wall Street — who apply math and statistics to the study of financial markets using sophisticated computer science techniques. They develop trading algorithms that make use of patterns in data in order to predict and profit from investments. Traditionally, only the very top Ivy League math geniuses end up working as quants on Wall Street where they can expect lucrative salaries, although the lion’s share of the profits typically go to the hedge fund managers and not the quants.
Democratizing Access to an Elite Industry
Quantiacs represents a new breed of hedge fund. Quantiacs is a registered CTA based out of Silicon Valley, managed by a veteran quant, and seed-funded by a quant hedge fund pioneer, Christian Baha. At Quantiacs, it’s all about the quants. Empowering them and providing access to an industry that has traditionally been closed.
Instead of the hedge fund managers earning the lion’s share of the profits as in the case of the top quant hedge funds in the world, Quantiacs empowers freelance quants with all of the infrastructure of a CTA-registered hedge fund, and splits the profits with them 50–50. At Quantias, it’s all about the quants, and the company is based on the idea that great quants don’t have to be Wall Street elites — but can come from anywhere in the world if nurtured with the right tools, data, infrastructure, and capital access.
This is a highly disruptive business model, and the end-result is the industry’s first and only marketplace for quantitative trading algorithms. Whereas most traditional hedge funds provide a prixe fixe menu of options to investors, Quantiacs provides an a la carte menu that provides greater personalization and customization to the unique portfolios of institutional investors.
At Quantiacs, the quants are not employees. They are the boss. Everyday data scientists jumpstart their own quant hedge fund operation with the help of other quants. All of a sudden, the power to earn a fortune on Wall Street shifts in favor of the quants themselves. It’s a David vs. Goliath story. It’s like the rocket scientists of main street coming together to take on the old guard and get their fair share of the profits. If quants are the geniuses who are creating the algorithms that are basically money-making machines — why shouldn’t the quants earn a lion’s share of the profits?
Unlike most quantitative hedge funds — Quantiacs is not only betting on the nerds to win…Quantiacs is empowering the nerds to win on their own terms. On Quantiacs, a new marketplace of hedge funds is emerging. In fact, you can see all of the active trading systems available to institutional investors here: https://quantiacs.com/Systems/LiveSystems.aspx
How Quantiacs is Innovating
Most quant funds charge 20% of the profits along with a 2% management fee and then they hire a bunch of quants who crunch through algos from their office on Wall Street.
In contrast, Quantiacs waives the management fee and charges 20% of profits, but instead of hiring hundreds of quants, they host world’s largest incentive prize competition for quantitative finance in order to crowdsource algorithms from all over the world — offering winners access to investment funds of more than $2 million per quarter. The three best trading algorithms get to trade with $1 million /$750,000/$500,000 of Quantiac’s own money along with a small selection of institutional investors.
Quantiacs provides freelancers everything they need to take on the markets — including programming tools (frameworks in Python and Matlab) and data (25+ years of futures data and macroeconomic indicators). See all of the markets available here: https://quantiacs.com/For-Quants/GetStarted/Markets.aspx
Quantiacs has run eight competitions since it was founded in 2014. The most recent competition, which ended in December, drew more than 600 trading programs from more than 130 freelance quants.
FORBES did an in-depth story about Quantiacs recently and CEO Martin Froehler — a veteran quant himself — explained it this way:
“Great quants can come from anywhere. We are shifting the power of quantitative trading away from bankers and hedge funds, and towards hackers and scientists. We allow our quants access to an industry which has been closed. The quants provide Quantiacs with a non-exclusive license to use their algos while the individuals retain full ownership of the intellectual property (IP) they have developed. The algos never leave our platform. For investors, we offer access to the largest menu of cutting edge trading programs at an aggressive fee that is 20% of the profits. Then we split the income 50–50 with the quants. We focus on commodity futures, such as agriculture, energy, financial futures like the S&P 500, treasuries plus some euro bonds and cross-currency futures. Commodity futures are the most liquid market in the world, and they are uncorrelated to the stock market.”
Transforming Data Scientists into Quants
In the popular press and TV shows such as Showtime’s BILLIONS series, the “quants” of hedge fund lore are often cooly called the “rocket scientists of Wall Street.” Hedge fund stars are usually discretionary traders, but rarely the quants themselves. After all, the skills that it takes to be a top quant are a lot different than discretionary trading skills.
One of the most interesting things about this “3rd Wave” of hedge funds such as Quantiacs is that data scientists don’t have to be good at finance to compete. There are infinite number of ways to approach the markets through advanced statistics and data analysis, and this means practically anyone can become a star quant on Quantiacs.
Participating quants include university students and professors from the US, India, and Europe and all kinds of data scientists who spend their day-jobs in other areas besides finance.
One of the top quants on Quantiacs, for instance, is known by his alias Dr.Kodiak. By day he is a data scientist in the health industry making a modest salary, but by night — he is a legendary quant. He recently won his third first-place prize in a row and now his algorithms are managing futures portfolio of $2.5M from the company and pocketing 10% of the profits.
The last quarter he received a check from Quantiacs for more than $40k which he used to take his wife on a great honeymoon around the world and buy a new car.
Dr.Kodiak shares his experience on Quantiacs with the following:
“The key to succeeding in markets in general is to look where no one’s looking. Quantiacs is disruptive because I think there are a good number of basement-geniuses out there like me — people who have really strong quantitative and technical skills and can seriously beat the market, but might not have the credentials or the connections to get into the hedge fund world. Quantiacs democratizes access to financial markets and allows talent to rise to the top. I think we’re going to see things influenced less by who you know, and more by what you can achieve. Compared to other similar models, I think the key difference is that Quantiacs lets users retain their IP.”
Many of the freelance quants participate more for the challenge instead of guaranteed winnings. One of them goes by the handle Kviggy0 — he’s a 22-year old student in India studying electrical engineering. He began learning about the markets one year ago and had studied time series analysis and signal processing during his undergrad, and so he wanted to put the knowledge to use somehow. Prior to learning about quantitative finance he was mostly working on data analysis for radio astronomy. He was originally interested in Quantiacs because it was a challenge to predict markets and he likes to solve hard problems. Here’s what he had to say about his experience on Quantiacs:
“I like to compete on Quantiacs mainly because the IP is owned by the authors and is protected unlike similar platforms.The Quantiacs toolbox is simple and intuitive and the data is the best I’ve found for managed futures. The platform is great because it helps to scale up strategies which is what investors are looking for. Using Quantiacs allows me to play around with statistics and solve complex problems that have real impact. I’m very happy that more smart quants are joining the community and the discussions in the forum really show it. It’s a lot of fun to help revolutionize the hedge fund industry while still in university.”
Innovation from Experience
Quantiacs founder and CEO Martin Froehler launched and led a quantitative trading research firm in Switzerland owned by Austrian hedge fund manager Christian Baha called IdeaLab Research — it was there that Martin realized that there was a disconnect between the amount of high-caliber quant talent in the world compared to the low number of opportunities for that quant talent.
He had to send away 99 out of 100 people he interviewed, even though most of them would make excellent quants. This is what inspired him to start Quantiacs to pursue his vision of empowering quants and democratizing the industry.
Indeed, most hedge funds receive 100 cover letters a week from prospective quants, but traditionally only those with a PhD from an Ivy League school pass the first screening. Not so at Quantiacs — anyone with basic programming and data science skills are welcome to learn and submit trading strategies to the competitions.
Seed Funded by an Austrian Hedge Fund Pioneer
Christian Baha has over 25 years of experience directing financial services and technology companies and operating alternative investment vehicles, and his companies have raised more than $2B in assets. He was one of the first to pioneer fully systematic investment strategies after launching the Superfund in 1996 which offers investments to retail investors in over 15 countries worldwide.
In the 1990s Baha made waves for being the first hedge fund manager to democratize the investor side of hedge funds — allowing retail investors to participate in them for. the first time.
Baha explains why he’s so optimistic on Quantiacs:
“The traditional model in quant finance is to hire some top researchers, have them build algorithms, and market one product to investors, and so Quantiacs makes this more efficient by hosting its marketplace to connect quants and investors. Quantiacs is changing the whole ecosystem of the hedge fund industry. For investors, we give everybody access to the best strategies in the world with a platform that provides all due diligence and trading. For quants we provide best-in-class tools and data for backtesting along with a professional production platform and distribution with a very high payout of 50% of all fees of what is made from the investments. We are bringing our quants billions of dollars of investor money. Quantiacs will have the highest Sharpe Ratios in the world and 100k freelance quants in the next 5 years.”