China Hedge Funds Pay $300,000 to Beat Wall Street to Top Graduates

(Bloomberg) — When computer major Garen Zhou postponed his studies in the US because of the pandemic, he applied for internships at China’s largest Internet companies.

In the end, the Peking University graduate chose Ubiquant, a local hedge fund that manages $8 billion in assets and offers top students an annual salary of as much as $300,000. After a year, Zhou became a permanent employee and dropped out of enrollment at Johns Hopkins University.

“The benefits of staying in this job far outweigh those of studying in the US, both in terms of knowledge and financial returns,” said 23-year-old Zhou.

For elite students in artificial intelligence and computer science, companies like Ubiquant are offering three times the $100,000 sticker price for recent graduates on Wall Street, illustrating a shift in global financial hiring driven by the pandemic and the rising wealth of emerging markets. Instead of pursuing an education in the US that often leads to opportunities in international companies or even staying in America, some of the best and brightest in the country choose to stay at home.

Graduates are especially in demand from funds that use computer modeling to trade, which have risen due to the influx of wealthy individuals into the world’s second largest economy. According to estimates by Citic Securities Co. assets in such funds in China have increased tenfold compared to four years ago to more than 1 trillion yuan ($155 billion).

But quant funds are also competing with internet giants from TikTok owner ByteDance to Alibaba Group Holding Ltd. and global hedge funds, including Bridgewater Associates LP and Citadel LP. The battle for talent transcends even business as China and the US make technological superiority key national goals, channeling increasing support for research and innovation, as well as for data security.

“It is very important for us to identify talent at an early stage because once they go abroad to study, they have more options and we will have to compete with international companies,” said Wang Chen, 39, founder of Beijing-based Ubiquant. . “Their willingness to participate has increased significantly compared to a few years ago.”

Elite Education

Seeking an elite degree abroad is a well-trodden path, and the number of Chinese students pursuing computer science in the US has steadily increased over the past decade. With more students postponing college as the global pandemic limits travel, companies like Ubiquant have adapted their recruiting strategy by offering one-year internships.

So far, that tactic has worked. Ubiquant has seen an influx of talent due in part to Covid-19 and also as a modest tech industry in China struggles with regulatory changes. The number of applications has increased six times this year to more than 300 compared to when the company was founded.

Zhejiang High-Flyer Asset Management also responds to the changing priorities of graduates. The country’s largest quantitative fund, which manages more than $10 billion, has hired about 10 researchers in the past year, many of whom have given up on foreign studies during the pandemic, said Chief Executive Officer Simon Lu. According to founder Qiu Huiming, Shanghai Minghong Investment Co., which manages $8.5 billion in China, has hired more than 10 experts in artificial intelligence and natural language processing in recent years.

And Lingjun Investment, which manages about $7.7 billion, plans to expand its investment and research team by as much as a third to 140 people by the end of the year, the company said.

The higher wages are in line with a broader global trend that extends beyond hedge funds as business is booming at financial firms. In the space of a few months, entry-level salaries at top investment banks quickly rose to six figures, even before bonuses, as executives responded to a rebellion against the demands of life on Wall Street sparked by a scathing presentation by a group of freshman analysts at Goldman Sachs.

And while hedge funds help China retain students in priority areas like artificial intelligence, high salaries run counter to President Xi Jinping’s rhetoric about “common prosperity” as the Communist Party targets extreme wealth.

Powerful selection

Stationed near China’s prestigious Tsinghua University, Ubiquant tests people on everything from coding to statistics and examines their academic research papers, hiring about 10 recent graduates last year. It has even turned down people who have won national math Olympiad competitions, which are considered one of the most prestigious awards for younger students.

Wang says he has offered more experienced employees a salary of $1 million a year. The company also gives extra incentives to top personnel, such as one-time bonuses of 10 million yuan or profit sharing from breakout trading strategies, because he feels more comfortable poaching talent from international companies.

“If we think someone is worth hiring, we will try to hire them without sparing any effort,” Wang said.

Working speed

Back at Ubiquant headquarters, Zhou and his colleague Nathan Lin, who both joined Ubiquant last year, spent the first four months of their internship focusing on studying natural language processing and the company’s existing research.

“I like that your code and work speak for themselves,” rather than socializing and meeting clients, 22-year-old Lin said, adding that combined with Ubiquant’s better salary offer, this was the reason he joined the company came. instead of ByteDance or a job in banking.

The work pace is also appealing. Every day at 10 a.m. they work an hour and a half before going to lunch and napping at their desks. They resume at 1 pm, writing codes and brainstorming strategies until about 7 or 9 pm before hitting the gym. They often play ping pong with other colleagues in the office.

“Working here fits the spirit of a self-branded nerd,” Zhou said. “As long as I’m still learning, I’ll stay.”

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