Trading places: Chinese quant funds lure AI talent from the US

Yuan Yu, founder of Shanghai-based quantitative hedge fund Mingshi, recognised an opportunity when several intern prospects studying in the US said they were struggling to complete their PhDs amid university funding cuts and stricter visa policies under President Donald Trump.

“They told us that their supervisor’s funding had been cut, so they couldn’t continue their studies,” said Yuan, whose investment firm manages US$2.5 billion in assets. “They felt lost and didn’t know what to do. This prompted us to consider extending our internship offers to full-time job offers.”

By seizing the chance to snap up the candidates, Mingshi echoed a larger trend in China’s rapidly evolving quant hedge fund sector. The US upheaval in academia – and the government’s antipathy towards foreign students – is helping such funds secure the brain power that they will need to harness China’s breakthroughs in artificial intelligence (AI) and fuel their expansion beyond the domestic market.

Companies like Mingshi often compete against local rivals and larger, more established global giants for the world’s top scientists and engineers, many of whom would have stayed in the US in the past.

“We are hungry for top talent,” Yuan said. “In the past two to three years, we have been offering salaries that are higher than some of the top US firms.”

The sector has been growing rapidly. The yuan-denominated market is now the world’s second largest, with a combined capitalisation of more than US$11 trillion, feeding demand for financial products aimed at wealth preservation or hedging.

Quant products managed by domestic hedge fund firms totalled 837 billion yuan (US$117 billion) at the end of 2024, with 768 billion yuan invested in stocks, according to Citic Securities. Such products from mutual-fund firms, mostly index-reinforcing offerings, held 295 billion yuan, it said.