Key Takeaways
- • Quantedge CEO Suhaimi Zainul-Abidin argues that deliberately reducing portfolio risk to lower volatility can harm long-term returns, and says the firm built a portfolio that targets a higher level of risk to pursue higher returns.
- • Quantedge, a Singapore-based systematic trading firm, has close to US$8 billion in assets under management, according to host Moritz Seibert, and was founded in 2006 by two founders with about US$3 million in initial capital.
- • Quantedge describes its core strategies as risk premia and factor-based market-neutral strategies, layered with long/short approaches, rather than conventional trend following or CTA strategies.
- • The firm has an active footprint in insurance-linked securities (ILS), where it allocates risk systematically across perils and geographies, though the market is illiquid and deals are negotiated bilaterally.
Summary
In an episode of the Top Traders Unplugged Open Interest series, hosted by Moritz Seibert, Quantedge CEO Suhaimi Zainul-Abidin discussed the firm's philosophy, origins and investment approach. Suhaimi argued that lowering risk to reduce volatility can intentionally depress long-term returns, and said Quantedge has built a portfolio that accepts and targets a higher level of risk in pursuit of higher returns. Seibert described Quantedge as a Singapore-based systematic trading firm with close to US$8 billion in assets under management that rarely appears in podcasts or interviews.
According to Suhaimi, two founders who had known each other since secondary school started Quantedge in 2006. One was a statistics professor and the other a reinsurance pricing actuary. They initially invested their own capital, then raised about US$3 million from friends and acquaintances. Suhaimi noted the founders had limited trading experience, which led them to build their strategy from first principles using their statistical and actuarial skills. The firm reached about US$500 million by 2013, when most of today's senior management joined. Suhaimi, initially general counsel, became CEO in 2018.
Suhaimi described the firm's history as far from smooth. The fund roughly doubled in its first two years, then lost almost half its value in 2008 before recovering to a new high in 2009. He said 2010 was the fund's best year, with a return of about 82%.
On strategy, Suhaimi said the industry generally classifies Quantedge as a global macro systematic or systematic quantitative manager that trades global markets top-down. He said its core is risk premia strategies, which accept risk in exchange for expected return, drawing an analogy to insurance premiums. Quantedge also applies risk parity concepts and layers in long/short, factor-based market-neutral strategies. Suhaimi said the firm's insurance-linked securities activity is systematic in how it allocates risk budget across perils such as hurricanes, earthquakes, wildfire and cyber, but the market is illiquid and deals are negotiated individually with cedents and counterparties.
According to Suhaimi, two founders who had known each other since secondary school started Quantedge in 2006. One was a statistics professor and the other a reinsurance pricing actuary. They initially invested their own capital, then raised about US$3 million from friends and acquaintances. Suhaimi noted the founders had limited trading experience, which led them to build their strategy from first principles using their statistical and actuarial skills. The firm reached about US$500 million by 2013, when most of today's senior management joined. Suhaimi, initially general counsel, became CEO in 2018.
Suhaimi described the firm's history as far from smooth. The fund roughly doubled in its first two years, then lost almost half its value in 2008 before recovering to a new high in 2009. He said 2010 was the fund's best year, with a return of about 82%.
On strategy, Suhaimi said the industry generally classifies Quantedge as a global macro systematic or systematic quantitative manager that trades global markets top-down. He said its core is risk premia strategies, which accept risk in exchange for expected return, drawing an analogy to insurance premiums. Quantedge also applies risk parity concepts and layers in long/short, factor-based market-neutral strategies. Suhaimi said the firm's insurance-linked securities activity is systematic in how it allocates risk budget across perils such as hurricanes, earthquakes, wildfire and cyber, but the market is illiquid and deals are negotiated individually with cedents and counterparties.
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