Funds are churning out new products, and investors who have abandoned stock pickers are jumping on board.
issued Friday, July 3, 2026 · 08:53 AM
[BEIJING] Quantitative funds are growing in popularity in China, where investors are pouring in money.
Ubiquant, one of the top players, raised 2.6 billion yuan ($384 million) in less than two hours to launch a new fund in May, according to people familiar with the matter. Investors also purchased more than 100 million yuan of Shenzhen Chengqi Asset Management’s products within seconds, according to the product sales company.
they are not alone. Quant assets under management more than doubled to more than 2.6 trillion yuan in less than a year. This enthusiasm is further fueled by the rapid and successful adoption of artificial intelligence. Chinese investors have traditionally favored star executives over computer models, but machines outperformed humans by more than 20 percentage points last year. Funds are churning out new products, and investors who have abandoned stock pickers are jumping on board.
“The breadth of quants covering thousands of stocks exceeds the depth of research pursued by discretionary long-only managers,” said Chen Xu, chief operating officer of technology provider BigQuant.cn, who has co-authored a white paper for quants since 2021. “Quants have finally gone mainstream and there is no going back.”
This has led to an explosion of investment products on offer. New quantitative products more than doubled last year to 6,296, accounting for 46% of all new hedge fund sales, according to a January report from Industrial Securities. Of the more than 3,000 new products registered by top executives, more than 80% were launched by quants.
The long-only equity quant gained 44.7% last year, outperforming its discretionary rivals by 20.3 percentage points, according to Citic Securities. This is the strategy’s widest lead since 2021, compared to an average difference of 13 points over the past five years, according to the data.
The success of quants in China’s 8 trillion yuan hedge fund industry is a clear reversal from two years ago. The industry has suffered a series of financial failures that have drawn the ire of government regulators. The fund was accused of causing excessive volatility and market explosions. Exchanges have cracked down on the use of high-frequency trading to circumvent trading restrictions and tightened supervision of leveraged products.
One dramatic example is the rebirth of the Ningbo Lingjun Investment Management Partnership. In early 2024, the company’s trading model executed extremely concentrated sell orders, causing currency penalties and putting the company in crisis.
In response, Lingjun forced portfolio managers to meet stricter risk parameters for the algorithm and began real-time monitoring of trading data across the company. Also, in addition to medium-term and long-term models, signals with shorter time periods have also been added.
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As a result, the firm topped the ranking of top quantitative stocks last year with an average return of more than 70%, according to Shenzhen Chibawan Investment Management, a consultancy that tracks Chinese hedge funds.
Lingjun’s return also captures a deeper shift in the industry. Top quantitative firms are leveraging upfront investments in AI, talent pools and data advantages to build a “technological moat” that is difficult for smaller companies to cross, according to a report by hedge fund brokerage firm Gualian Minsheng Securities.
That spurred Linjun’s ambition to join the fundraising boom. Lingjun, which has avoided adding new investors for about two years as it focuses on internal improvements, is now aiming to increase its assets under management by 20 billion yuan to 40 billion yuan, according to chairman Cai Meijie. The current assets held are 40 billion yuan to 50 billion yuan.
According to a report by Guolian Minsheng, the investment logic has shifted from “choose the quant” to “choose the quant with the most powerful AI capabilities”, making it natural for inflows to concentrate on top players. As a result, foundations are scrambling to recruit the best science and engineering students as they compete to build and refine their own models.
Traditional stock pickers are also racing to adapt. Shanghai Minority Asset Management embodies the trend of embracing AI. The company spent five years transitioning from purely discretionary stock selection to relying on AI agents. We trained a model based on the core theory of investing that “excess returns arise from the majority’s cognitive biases” and used agents to autonomously mine factors that identify those biases more quickly.
In May, the company quoted founder Zhou Liang in an article on its WeChat account, saying, “The moat that once protected us has become a walled prison.” “Evolution is not a choice. It is a matter of life and death.”
For foreign asset managers, the implications are clear. It is difficult to raise funds without a quantitative strategy. Of the more than 30 global companies operating hedge fund businesses in China, only a handful, including Two Sigma and DE Shaw, have fully implemented strategies. The remaining investors are primarily fundamental managers competing on research depth and brand recognition, most of which still struggle with assets of less than 500 million yuan.
As investing shifts to competing machines and quantitative funds grow in size, it will inevitably become harder to beat the market.
One of the most popular quantitative fund products is the index-enhanced fund. It tracks an index and uses an algorithm to reweight individual companies in order to outperform the underlying benchmark.
PaiPaiWang said average excess returns from the strategy had more than halved to 4% by April 30 this year compared to the same period last year, and some managers had generated little alpha since October. Since then, only 14% of such products have recorded positive excess returns each month.
“As China’s capital markets continue to mature and pricing efficiency improves, the threshold for quantitative managers to generate excess returns will inevitably rise,” Shanghai Mengxi Investment Management, a quantitative fund that has posted monthly profits since October, said in a statement to Bloomberg. “This is a challenge many quantitative managers have to face.”Bloomberg
