Quantitative hedge funds including Qube Research, Squarepoint Capital, and Engineers Gate, which are traditionally dominated by computer-driven strategies, are increasingly incorporating human traders into their operations, according to a report by Business Insider.
The firm are diversifying their approaches by hiring stock-pickers or allocating capital to portfolios managed by third parties.
The shift comes as multi-strategy hedge funds, including Millennium, Citadel, and Point72, fiercely compete for top stock-picking talent, with quant firms now joining the trend as they look to expand their “alpha sources”.
Qube Research, a $20bn London-based manager, has supported 44 stock-picking managers through separately managed accounts (SMAs) since early 2023. These external accounts allow Qube to monitor trading and risk management while enabling managers to seek additional capital. Qube plans to expand this number to 100 managers in the coming years.
Squarepoint Capital, another leading quant firm, also uses SMAs but focuses on non-systematic strategies. According to Nicolas Janson, Squarepoint’s head of external investment strategies, this approach ensures that external strategies complement rather than compete with internal ones. “We want to diversify our alpha sources,” Janson said.
Engineers Gate, a $10bn quant manager, is also enhancing its human-trading capabilities. The firm recently expanded into Asia and hired Mike Daylamani to lead its fundamental trading team starting in 2025. Daylamani brings extensive experience from firms like Schonfeld, Balyasny, and Point72, where he blended fundamental and quantitative strategies.
Even Two Sigma, one of the largest hedge funds globally, has entered the realm of human stock-picking, with the firm bringing on notable talents including Zach Rieger and Daniel Schuster from Maverick’s ROAM Global Management, and Ernesto Cruz, previously with Singapore’s sovereign wealth fund. Despite a recent 10% workforce reduction, Two Sigma has retained all portfolio managers.
