China’s hedge funds are trying to outcompete Wall Street in the fight for the country’s top talent
When computing major Garen Zhou deferred his studies in the U.S. because of the pandemic, he applied for internships at China’s biggest Internet companies.
In the end, the Peking University graduate chose Ubiquant, a local hedge fund managing $8 billion of assets which is offering top college leavers annual salaries of as much as $300,000. After a year, Zhou became a permanent employee, giving up his enrollment at Johns Hopkins University.
“The benefits of staying in this job far outweigh those of studying in the U.S. both in terms of knowledge and financial return,” said 23-year-old Zhou.
For elite students in artificial intelligence and computer science, companies like Ubiquant offer triple the $100,000 sticker price for freshly minted college graduates on Wall Street, illustrating a shift in global financial hiring driven by the pandemic and rising emerging market wealth. Rather than aspire to an education in the U.S. that often leads to opportunities at global companies or even staying in America, some of the nation’s best and brightest are choosing to stay home.
Graduates are in particular demand at funds which use computer models to trade, which have been lifted by inflows from rich individuals in the world’s second-biggest economy. Assets at such funds in China have jumped tenfold compared with four years ago to exceed 1 trillion yuan ($155 billion), according to Citic Securities Co. estimates.
But quant funds are also competing for hires with Internet titans from TikTok owner ByteDance to Alibaba Group Holding Ltd., and global hedge funds including Bridgewater Associates LP and Citadel LP. The battle for talent even transcends business as China and the U.S. make technological superiority important national objectives, channeling increasing amount of support toward research and innovation, as well as data security.
“It’s very important for us to identify talent early on, because once they go abroad to study, they’ll have more options and we’ll have to compete with global companies,” said Wang Chen, 39, founder of Beijing-based Ubiquant. “Their willingness to join has increased quite a lot compared with a few years ago.”
Seeking an elite education abroad is a well trodden path, and the number of Chinese students pursuing computer science degrees in the U.S. has steadily risen in the past decade. Now with more students deferring their studies as the global pandemic restricts travel, companies like Ubiquant have adjusted their hiring strategy by offering one-year internships.
So far that tactic is working. Ubiquant has seen an influx of talent, partly due to COVID-19 and also because a humbled tech industry in China is grappling with regulatory change. Applications have jumped six times this year to more than 300 compared with when the company was founded.
Zhejiang High-Flyer Asset Management is also capitalizing on the changing priorities of graduates. The country’s largest quant fund managing more than $10 billion hired about 10 researchers over the past year, many of whom gave up overseas studies amid the pandemic, according to Chief Executive Officer Simon Lu. Shanghai Minghong Investment Co., which manages $8.5 billion in China, hired more than 10 experts in artificial intelligence and natural language processing in recent years, according to founder Qiu Huiming.
And Lingjun Investment, which manages about $7.7 billion, plans to expand its investment and research team by as much as a third to 140 people by the end of the year, the firm said.
China’s private quant funds have been facing a persistent shortage of new talent since 2018 amid the industry’s expansion, pushing up salaries, according to Eric Zhu, Shanghai-based head of financial services at recruiter Morgan McKinley.
“It’s hard to hire top talent like those that can already develop good strategies as they would prefer to trade themselves,” Zhu said.
The higher wages are in line with a broader global trend that goes beyond hedge funds, as business at financial firms is booming. In the span of a few months, entry-level salaries at top investment banks have quickly shot up into six figures, even before bonuses, as executives responded to a rebellion against the demands of Wall Street life sparked by a damning presentation from a group of first-year analysts at Goldman Sachs.
And while hedge funds are helping China to hold on to students in priority areas like artificial intelligence, high salaries jar with President Xi Jinping’s rhetoric about “common prosperity” as the Communist Party takes aim at wealth extremes.
Stationed near China’s prestigious Tsinghua University, Ubiquant tests people on everything from coding to statistics and examines their academic research papers, hiring about 10 fresh graduates last year. It’s even turned down people who have won national maths Olympiad contests, deemed one of the most prestigious awards for younger students.
Wang says he has offered more experienced hires salaries of $1 million a year. The company also gives extra incentives to top staff like one-time bonuses of 10 million yuan or profit sharing from breakout trading strategies, as he gets more comfortable poaching talent from global corporations.
“If we think someone is worth hiring, we will try to hire them, sparing no efforts,” said Wang.
Back at Ubiquant’s headquarters, Zhou and his colleague Nathan Lin, who both joined last year, focused on studying natural language processing and the firm’s existing research for the first four months of their internships.
“I like the fact that your code and work speaks for itself,” instead of having to socialize and meet clients, said 22-year-old Lin, adding that this combined with the better salary offer from Ubiquant was the reason he joined the company instead of ByteDance or a job in banking.
The work pace also appeals. Starting at 10 a.m. every day, they work for an hour and a half before heading for a lunch break and getting a quick nap at their desks. They resume at 1 p.m., writing codes and brainstorming strategies till about 7 p.m. or 9 p.m. before hitting the gym. Often they’ll play ping pong in the office with other colleagues.
“Working here matches the spirit of being a self-branded geek,” said Zhou. “As long I’m still learning, I’ll be staying on.”
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