China’s quantitative hedge funds are attracting record inflows as AI-driven strategies continue to outperform traditional discretionary managers, accelerating a shift in investor preferences across the country’s hedge fund industry.
Leading quant manager Ubiquant raised RMB2.6 billion ($384 million) for a new fund in less than two hours, while other systematic managers also reported strong demand for new launches. Assets under management across China’s quant sector have more than doubled over the past year to exceed RMB2.6 trillion, according to industry data.
Performance has been a key driver. Long-only quant equity funds returned 44.7% last year, outperforming discretionary managers by more than 20 percentage points, according to Citic Securities. Quant products also accounted for nearly half of all new hedge funds launched in 2025, reflecting growing investor appetite for systematic strategies.
The industry’s rapid adoption of artificial intelligence is widening the gap between leading quant firms and traditional stock pickers. According to Guolian Minsheng Securities, firms with proprietary AI models, deep data resources and engineering talent have established a significant competitive advantage, with investors increasingly selecting managers based on AI capabilities rather than track records alone.
The trend is also reshaping competition. Firms including Ningbo Lingjun Investment Management have rebounded after strengthening risk controls and upgrading trading models, while discretionary managers are investing heavily in AI to remain competitive. Shanghai Minority Asset Management said its transition to AI-driven investing reflects an industry where “evolution is not a choice.”
Despite strong inflows, managers acknowledge alpha is becoming harder to generate as quantitative strategies proliferate. The excess returns delivered by China’s popular index-enhanced strategies have narrowed sharply this year, highlighting the increasing challenge of outperforming increasingly efficient markets.
