Quant Fund career exquisite salaries vs underperformance

14 May, 2026

Introduction

In a campus event where I was asked to be a guest lecturer on how to use AI properly, there was a particular student showing great interest in funds management and especially Quant Funds. This article is made to properly convey the depths of funds management.

Background

Quant Funds are in a hype trend in the last decade and keep on growing, also with several big names making the headlines (Rennaissance Technologies ~ Medallion Fund, Jane Street, Citadel, Two Sigma, etc) kinda hard to miss the hype surrounding these quants. Added to the fact the salaries received by their analysts and researchers are one of the highest, all these factors contribute directly to the hype.

Data

So what's the data saying, with the sky-high salaries paid by Quants to their core components, their fund's performance must be extraordinary, right?

Let's see the data:

Table 1: quant ~ bottom

Table 2: quant ~ bottom again

Table 3: quant ~ bottom in every time period

Table 4: quant ~ one of the highest AUM (asset under management) with bottom of barrel performance

So there are quant funds like Rennaissance and Jane Street. And there are, how to say it, ordinary mostly underperforming quants? Those are two very different category and they cannot be put into the same category. The data above should give you a clearer big picture on how the performance landscape truly is, not some believe that Quant automatically equals massive alpha performance, it's not.

Q1: why the low performance?

Answer: it depends on the how the structure of the fund is, but mostly could be traced to:

• Massive number of trades means spread (delta between bid and ask) costs are high.
• Quants put too much focus on historical data ~ backward-looking, whereas investment should be forward-looking.
• Letting the algo to make direct trading / investment decisions means when shock event happens, there is no quick way of changing the direction. Need to make adjustments to algo programming. --> in Aurum's website you can see how slow these Quants adopts to market changes, particular evidence when covid-19 hit. But overall from the graphs you can see it's slow to adjust.

Q2: is it possible for retail investors to apply value investing in small cap company?

Answer: Value investing can be applied to any sizes of caps, it's just much easier for the market to recognize undervalued large caps compared to undervalued small caps.

Key points:

• Focus on forward-looking view, don't get too fixated to events in the past. History are reference points, they do not determine the future.
• Strengthen your stock picking skill, when a big name entered into a stock (~ for example: Warren Buffett, Bill Ackman, etc), find the patterns what were these legends looking for?
• Find turnaround potential.
• The existance of activist investor is considered as a bonus, not the primary trigger.

Q3: is price action / Broker Summary a good method for retail investors?

Answer: nope, not even close. Broker Summary can be easily manipulated: an Entity (usually institutions) can simulate a money flow coming into a stock from Broker A, but exit using Broker B-C-D-E and you'd missed the exit entirely.

--> Retail thinks the Entity is still invested in the stock, but in reality they have sold out.

Check this article on how the pump and dumpers applies the method called: "Cornering the Market". Pay close attention to the last few sections where I point out the exact timing the "Cornering" is completed on some case studies: ERTX, CUAN, BREN, KDTN and MORA.

Q4: is it allowed to be an activist as largest shareholder and got the power to change corporate structure?

Answer: Read more on activist investor, it is the norm for every activist investor to "shakeup" corporate structure if needed, especially family-run business --> replaced by full professional Board of Directors. No insider trading issue, an activist buys the shares of a company to "activate" or unlock the hidden value via varios methods, some of them:

• change of management to cut corruption, questionable business practices, etc.
• funding either debt or equity to restructure balance sheet.
• Readjust the direction of the company (e.g: rice / vegetables producing company turned to real estate company due to massive land bank assets on prime locations).

Q5: size of acquired companies and what are the exit conditions?

Answer: all depends on valuation: a USD 1 Billion company who got destroyed to USD 50 million, as a group we could scoop 10-20% ownership. In Vietnam case study, total group ownership are majority in a real estate stock.

Exit condition: sooner or later, the market will recognize the detach in valuation between current prices vs fair value of the company. The valuation we bought are usually called "stock at option value" ~ 30-50x cheaper than the fair value. We exit depending on the pace of the price appreciation and depends on how invested we are.

If we hold low 1-2%, we offload quickly on massive jumps, different story if we hold 20%. Large holdings can only exit by block sale to other institution (~ other hedge funds, private equities, etc).

Conclusion

My advice still holds:

1. Getting a career as a quant is one of the best in terms of incentive / pay.
2. Once you've built up enough wealth to start investing, invest not in a Quant Fund (those ordinary underperforming variant). Unless you're Rennaissance's analyst and get access to their Medallion Fund, I think it's better to allocate the portfolio to conventional funds (Equity Long/Short, Long biased).