SHANGHAI/HONG KONG—China’s algorithm-driven quant funds boomed in 2021 as investors sought alternatives to a languid stock market, but the final months of the year saw some “flash boys” bogged down by heavy volatility and their sheer size.
High-flyer Quant, a top hedge fund house in China that uses powerful computers and artificial intelligence (AI) to exploit market opportunities, last week apologized to investors for a record slump in performance. The fund house, which manages roughly 100 billion yuan (about $15.7 billion), blamed the crash on wild shifts in investor sentiment and crowded trades in a sector that is “growing too fast in size.” High-flyer’s public apology echoes an earlier setback in 2021 at Shanghai Minghong Investment Management Co., another quant heavyweight fund that suffered losses following a surge in assets under management (AUM).
