China’s quantitative hedge funds are attracting record levels of investor money as AI-powered investing rapidly gains favor over traditional stock picking.
Assets managed by China’s quant funds have more than doubled in less than a year to more than 2.6 trillion yuan ($363 billion), according to Bloomberg News, fueled by strong performance and growing investor confidence in AI-driven trading strategies.
The surge has sparked intense demand for new investment products. Ubiquant, one of China’s largest quantitative fund managers, raised 2.6 billion yuan ($384 million) for a new fund in less than two hours in May, while investors subscribed to more than 100 million yuan of a product from Shenzhen ChengQi Asset Management within seconds, Bloomberg reported.
The boom reflects a dramatic shift in China’s investment industry. Long-only quantitative funds returned 44.7% last year, outperforming discretionary stock-picking funds by more than 20 percentage points, according to Citic Securities. New quantitative products more than doubled to 6,296 last year, accounting for nearly half of all new hedge funds launched.
The rapid growth follows a turbulent period for China’s quant industry, which came under regulatory scrutiny in 2024 after several firms were blamed for contributing to market volatility through high-frequency trading. Since then, many firms have strengthened risk controls while expanding investments in AI, data infrastructure and engineering talent.
The shift is also reshaping competition. Bloomberg reported that investors are increasingly choosing fund managers based on the strength of their AI capabilities rather than their portfolio managers’ reputations, prompting traditional stock pickers to adopt AI-driven investment strategies to remain competitive.