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> But in the four months since it began trading on June 1, Quantopian’s traders have lost about 3%, according to people close to the matter. The S&P 500 rose 6.
by chollida1 9y ago
> But in the four months since it began trading on June 1, Quantopian’s traders have lost about 3%, according to people close to the matter. The S&P 500 rose 6.6% in that period.
It's still way to early to be worried about the fund but to be fair, its been a good time for most quantitative funds. And the space that I imagine Quantopian is competing in, factor based models for US Equities, is a very crowded space right now.
I'm sure having a flagship fund was an important project for the company I'm reminded of the Paul Graham story where he tells Jerry Yang his idea for selling ads and then realized when Jerry told him no that yahoo was already selling ads for more than they were worth.
I'm wondering if there is a parallel here with quantopian where they were better off letting people think that they could beat the market with a factor based model, rather than actually starting a fund and showing their users how tough it really is.
> Still, Quantopian manages about $50 million in a hedge fund, a tiny amount in that world and well below the $250 million executives anticipated at the end of this year
This might work in their favour.
The difference in the management fee doesn't translate into alot of money and its much easier to manage a sub $100 million fund than it is to run a $250 million dollar fund. Especially for one that is just starting out and doesn't appear to have found their secret sauce just yet.
- inthewoods 9y agoThe problem is that there is no other really scalable revenue play for a product like Quantopian other than starting a fund. They could try and charge people for the platform but that is pretty niche. That could be a good business - but I'm not sure it's a VC-funded business. Still, I've been skeptical of Quantopian's business for a while. System writers are likely to opt-out if they have any success, and they need a track record of 5+ years in order to raise any substantial amount of money - particularly true with something so unproven like a crowdsourced algo fund.
- huac 9y agoThey could (you know, theoretically) copy Robinhood's business model and its evolution - allow users to trade algorithmically with their own accounts, offer them up as sacrificial lambs to HFT, and then offer credit, and so on.
- unixhero 9y agoUhm, isn't that what they are doing? :)
- javiramos 9y ago"offer them up as sacrificial lambs to HFT" what do you mean?!
- samsonradu 9y agoAll the orders placed are sent to HFT traders before confirmation so they can take advantage of the information. There is even a commercial on Bloomberg for a broker that explicitly says they don’t sell out your orders like others do.
- creaghpatr 9y agoMore flexibility to capture Alpha with less funds but requires a separate strategy compared to fund managing billions or trillions of dollars.
- Bromskloss 9y ago> the Paul Graham story where he tells Jerry Yang his idea for selling ads and then realized when Jerry told him no that yahoo was already selling ads for more than they were worth. What was the moral of that story?