The Allure of the Freelance Quant

Robert Carver, author and retired executive at quantitative hedge fund AHL, poses this seductive question to quants: “What if you could work for yourself, and still build hedge fund trading systems?”

Imagine developing a trading strategy and then selling it or licensing it to a fund for big dollars or a share of the profits. “For the quant,” writes Carver in an article for eFinancialCareers, “This is a pretty good deal, as they can now go and live on a beach somewhere after doing a few years of hard work.”

“This is the world of freelance signal generation,” explains Carver.

Freelance quants are not new, if not yet common. However, there are signs that interest in the concept is growing. Another eFinancialCareers article last month said quant fund QRT was recruiting “external alpha generators” and already had three on board with plans to hire 20 in the next few years.

Being a freelancer, Carver says, “Sounds like a fantastic opportunity for both quants and hedge funds.”

“But is this really true?”

Carver goes on to point out the pros and cons, which are not so much cons as potential pitfalls of such arrangements.

Selling the strategy to a fund sounds like a good deal, Carver agrees, unless the fund doesn’t pay or swipes the basic strategy. There are risks for the fund, too, he says, including the potential for the model to stop working or not work on data it hadn’t previously encountered.

Instead, Carver says a licensing arrangement is often preferred by both sides. The freelancer shares in the profits the model generates and the fund continues to get the quants continued involvement.

The downside is the potential for being underpaid, as well as the difficulty in even knowing whether the fee is correct, he says. “This is especially true for models providing signals rather than explicit trades, since there are no specific positions which can be directly attributable to a specific signal.”

Carver goes on to discuss code hosting arrangements, noting that “A truly paranoid freelancer trader may wish to host their systems on their own computers, or more likely on a secure cloud.”

Ironically, instead of becoming free of the daily grind, running such a hosting operation means hiring IT support and even junior traders. In essence, says Carver, The quant is effectively running their own mini hedge fund.”

“We’re going to need a bigger beach house.”

Photo by Mohamed Ali

Prime Day 2021 Brings New Challenges for Amazon Sellers
Accounting + Finance General Interest Leadership + Management

Prime Day 2021 Brings New Challenges for Amazon Sellers

Juneteenth: History and Significance
General Interest

Juneteenth: History and Significance

Biogen’s Long-Awaited Alzheimer’s Treatment
General Interest Healthcare Pharma

Biogen’s Long-Awaited Alzheimer’s Treatment

The Internet Had a Bad Day
Information Technology

The Internet Had a Bad Day

The Role of HR Departments in LGBTQ+ Pride
General Interest Human Resources Worklife

The Role of HR Departments in LGBTQ+ Pride

What It Means to Be a Leader During a Time of Crisis
General Interest Leadership + Management Worklife

What It Means to Be a Leader During a Time of Crisis

Mid-Life Crisis? Consider a Mid-Life Career Switch
Accounting + Finance General Interest Information Technology Leadership + Management Worklife

Mid-Life Crisis? Consider a Mid-Life Career Switch

Lawyers Look to Move Firms to Keep Remote Work
Legal Support

Lawyers Look to Move Firms to Keep Remote Work

Is the Hybrid Workplace Sustainable?
Worklife

Is the Hybrid Workplace Sustainable?

Bank of America, Competitors to Raise Pay
Financial Services

Bank of America, Competitors to Raise Pay

Class of 2021 to Enter Job Market
Financial Services Healthcare Information Technology Marketing Technology Professional Support

Class of 2021 to Enter Job Market

Pharmacies Are Entering the Mental Health Market
Healthcare Pharma

Pharmacies Are Entering the Mental Health Market

Pandemic Challenges Create New Opportunities for Virtual Career Development
Worklife

Pandemic Challenges Create New Opportunities for Virtual Career Development

America’s New Tech Hubs
Information Technology

America’s New Tech Hubs

How to Recognize if a Manager Is Right for You
Worklife

How to Recognize if a Manager Is Right for You

Green Key Resources is Hiring!
Accounting + Finance Architecture + Engineering Creative Financial Services Healthcare Human Resources Information Technology Legal Support Marketing Technology Pharma Professional Support

Green Key Resources is Hiring!

How to Think Like a Lawyer
Legal Support

How to Think Like a Lawyer

3 Questions to Unlock Your Authentic Career
Creative Worklife

3 Questions to Unlock Your Authentic Career

Businesses Rethink “Necessary Travel”
Worklife

Businesses Rethink “Necessary Travel”

YOLO Is Sparking Riskier Career Moves
Worklife

YOLO Is Sparking Riskier Career Moves

Latest Blog Posts
View All Posts
Prime Day 2021 Brings New Challenges for Amazon Sellers

Prime Day 2021 Brings New Challenges for Amazon Sellers

The return of Amazon Prime Day to the summer calendar appears to be a sign of progress, but new challenges...
Read More
Juneteenth: History and Significance

Juneteenth: History and Significance

Juneteenth is an annual holiday commemorating the end of slavery in the United States. Here are 19 facts about the...
Read More
Biogen’s Long-Awaited Alzheimer’s Treatment

Biogen’s Long-Awaited Alzheimer’s Treatment

On June 7, the U.S. Food and Drug Administration approved Aduhelm (aducanumab) for Alzheimer’s, which affects more than 6 million...
Read More