Cohen-backed Quantopian starts fund for outside investors
The fund is an attempt to ‘crowd source’ engineers who devise trading algorithms
Quantopian, a “crowdsourced” hedge fund backed by Point72’s Steven Cohen and Andreessen Horowitz, has launched its first fund for outside investors that want to tap into its community of data scientists and programmers.
The Boston-based company provides a platform for computer scientists to try their hand at coding trading algorithms, awarding prizes to and licensing the best strategies.
In 2016 Quantopian started trading with modest amounts of its own money to test out the real-life performance and resilience of some of the algorithms, and this spring it began allocating some of the $250m promised by Mr Cohen, one of the hedge fund industry’s best-known figures.
But according to a filing with the US Securities and Exchange Commission, Quantopian has launched its first fund for external investors, which a person familiar with the matter said started taking in money this summer.
The company declined to comment on the fund launch, citing regulatory restrictions, but John Fawcett, its chief executive and founder, told the FT that the work that had gone into allocating Mr Cohen’s money to disparate but complementary strategies “has been like launching a nuclear submarine”, but that there was “a lot of excitement that we’re now up and running”.
Quantopian said it has more than 160,000 members — up by more than a third since the start of the year — from 190 countries, and had allocated more than $150m to over a dozen trading strategies on its platform. It declined to give a breakdown between Mr Cohen’s money and that managed by the nascent new fund, named 1337 after a popular alternative alphabet on the internet.
Several platforms that have all sprung up in recent years that hope to shake up the mainstream world of “quantitative” investing.
The war for talent is ferocious, given the competition for programmers and data scientists in Silicon Valley and other parts of the finance industry, where many institutions are pouring money into areas like artificial intelligence and data management
Quantopian and the likes of Numerai, Quantiacs and QuantConnect hope that by giving thousands of people with the right background around the world the tools to do so on the side of their jobs — or full-time from their basements — they can eventually compete with even the biggest quant hedge funds.
Many established quants are sceptical that a disparate community of individual freelancers can compete with the industry’s boldfaced names, but several prominent hedge funds — such as WorldQuant, Two Sigma and Man AHL — have dabbled with similar crowdsourced solutions to finding lucrative trading signals and promising talent.
Mr Fawcett said that the main focus in the coming months would be to use recent slugs of investment from prominent venture capital firm Andreessen Horowitz and Mr Cohen’s Point 72 to bring more data on to the platform for its members to parse. Work will also be done on an “emerging managers programme” to bring existing, but small, quant fund managers on to Quantopian.
“There’s high start-up costs in setting up new quant funds, especially on the data and execution side, and that is something we can help with,” he said.