The quantitative hedge fund’s disciplined investment process and patient investor base continue to fuel strong performance and long-term expansion.
When adding a new investment strategy, the firm follows a strict process. A strategy must prove it is grounded in sound economic rationale, has robust historical data, has gone through extensive back testing, and can remain profitable after all trading costs. “This has been key in establishing a successful investment framework,” according to Zainul-Abidin. The firm is currently up 23% YTD despite the broader market turbulence experienced in the past several months.
Quantedge, headquartered in Sinagpore, is unique in the hedge fund industry for its market breadth. The quantitative firm, set up over 15 years ago, operates in over 300 markets using market-neutral and long/short equity strategies and continually broadens its investment strategies. Suhaimi Zainul-Abidin explains how the firm juggles this exposure while being able to vastly scale its AUM: “We invest across all asset classes; our thesis has always been maximum diversification across as many markets and asset classes as possible.”
In addition to the vast diversification within Quantedge’s portfolio, the firm is also unique in not relying on institutional capital. 95% of the fund’s investor base is made up of UHNW individuals and family offices. Zainul-Abidin explains that this investor profile has been fundamental to the funds continued growth: “ family offices and entrepreneurial investors tend to understand and accept trade-offs better than many institutions.” Quantedge also requires investors to commit capital for a minimum of three years, which “allows long-term wealth compounding. Our goal is to achieve approximately ten times growth over a ten-year period.”
Zainul-Abidin believes this close alignment with investors in achieving their stated aims will help the firm achieve a size of $20bn+ over the next 5-10 years. Most of the firm’s investors have allocated capital for over a decade, so “they have come to understand that volatility is a necessary component of achieving higher long-term returns. Over time, they have seen Quantedge consistnetly recovers from market corrections.” Additionally, Zainul-Abidin notes that several of Quantedge’s investors actually increase their allocations during periods of drawdown, such is their bullishness towards their firm and its strategy.
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