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

Green Key Against Gun Violence
General Interest Green Key News

Green Key Against Gun Violence

How to Support Mental Health in the Workplace
General Interest Green Key News Worklife

How to Support Mental Health in the Workplace

#WeAreGreenKey: Spotlight on Larry Goodman
General Interest Green Key News Pharma Worklife

#WeAreGreenKey: Spotlight on Larry Goodman

#WeAreGreenKey: Spotlight on Mike Glock
Accounting + Finance Financial Services General Interest Worklife

#WeAreGreenKey: Spotlight on Mike Glock

How to Make Your Candidate an Attractive Offer
General Interest Green Key News Worklife

How to Make Your Candidate an Attractive Offer

Tips for Recent Grads
General Interest Green Key News Worklife

Tips for Recent Grads

#WeAreGreenKey: Spotlight on Patrick Friel
Accounting + Finance General Interest Green Key News Worklife

#WeAreGreenKey: Spotlight on Patrick Friel

Working Moms at GKR
General Interest Green Key News Healthcare Human Resources Pharma Professional Support Worklife

Working Moms at GKR

Green Key Resources Opens New Jersey Office
General Interest Green Key News Worklife

Green Key Resources Opens New Jersey Office

#WeAreGreenKey: Spotlight on Tim Durkin
Accounting + Finance General Interest Green Key News Worklife

#WeAreGreenKey: Spotlight on Tim Durkin

Green Key Unlocked: Onboarding & Training in Agency Recruiting
General Interest Green Key News Worklife

Green Key Unlocked: Onboarding & Training in Agency Recruiting

How to Beat Work from Home Fatigue
General Interest Green Key News Worklife

How to Beat Work from Home Fatigue

#WeAreGreenKey: Spotlight on Arianna Curtis
General Interest Green Key News Information Technology Worklife

#WeAreGreenKey: Spotlight on Arianna Curtis

How to Provide Growth Opportunities
General Interest Green Key News Worklife

How to Provide Growth Opportunities

#WeAreGreenKey: Spotlight on Ryan Calpin
General Interest Green Key News Marketing Technology Worklife

#WeAreGreenKey: Spotlight on Ryan Calpin

Green Key Unlocked: Interview Tips & Etiquette
General Interest Green Key News Legal Support Worklife

Green Key Unlocked: Interview Tips & Etiquette

How to Help Ukraine
General Interest Green Key News

How to Help Ukraine

#WeAreGreenKey: Spotlight on Heather Branist
General Interest Green Key News Healthcare Worklife

#WeAreGreenKey: Spotlight on Heather Branist

How to Spot a Great Candidate
General Interest Green Key News Worklife

How to Spot a Great Candidate

#WeAreGreenKey: Spotlight on Elizabeth (Allgeier) Stock
General Interest Green Key News Professional Support Worklife

#WeAreGreenKey: Spotlight on Elizabeth (Allgeier) Stock

Latest Blog Posts
View All Posts
Green Key Against Gun Violence

Green Key Against Gun Violence

Over the last several weeks, all of us at Green Key Resources have been feeling grief, horror, anger, and frustration...
Read More
How to Support Mental Health in the Workplace

How to Support Mental Health in the Workplace

Mental Health Awareness Month may be coming to a close, but it's crucial to consider the wellness of your company...
Read More
#WeAreGreenKey: Spotlight on Larry Goodman

#WeAreGreenKey: Spotlight on Larry Goodman

Larry helped build the Pharma team from the ground up. Now, twelve years later, he and the team are more...
Read More