so-called quantitative trading of Athena Fund refers to replacing human subjective judgment with advanced mathematical models, using computer technology to select a variety of "high-probability" events that can bring excess returns from massive historical data to formulate strategies, greatly reducing the impact of investor sentiment fluctuations and avoiding irrational investment decisions when the market is extremely enthusiastic or pessimistic.
Therefore, generally speaking, the two most important factors in quantitative trading are mathematical models and computer computing power.
The purpose of Barron's finding these experts, who were well-known experts in the field of quantitative trading in his previous life, was to establish a quantitative trading mathematical model belonging to DS Capital, so as to achieve profits through model arbitrage.
Barron hired these people with salaries far exceeding the current income on Wall Street. Accordingly, all of them needed to sign a strict confidentiality agreement with DS Capital on the day they joined the company. If they breached the agreement, they would face high compensation.
In fact, with Barron's current ability, those who betrayed him would probably have to endure more than just monetary compensation...
After all, for a quantitative trading fund company, the mathematical models they use will always be the company's top secret, their bread and butter, and the result of their greatest investment of manpower and capital.
Initially, these people will go to London, where they will conduct research and application of mathematical models.
There was no way. After all, in his previous life, most of the funds that Baron could remember were quantitative trading funds on Wall Street. As for the leaders of this type of funds in the UK, they were less well-known than their counterparts on Wall Street. The one that impressed him the most was Cantab Capital, but this company has not yet been established...
This time, when entering the field of quantitative trading, DS Capital will establish a new private equity fund in addition to the Mars Fund, named Athena Fund.
Athena is the goddess of wisdom in Greek mythology. The Athena Fund also represents that DS Capital will use the crystallization of human wisdom to apply it to quantitative trading arbitrage.
As for the source of funds for the Athena Fund...
When attending a Goldman Sachs cocktail party before, Sands Group owner Anderson and Amway Group chairman Steve Van Andel were both very interested in Mars Fund, a private equity fund under DS Capital.
However, the Mars Fund has closed its investment channel for this year, and the next opening will definitely have to wait until next year.
At that time, Barron gave the two another option, which was DS Capital's new fixed income product.
After Barron's introduction, both of them became interested in it.
Because the fixed income product that Barron mentioned, although the annualized return is only 10%-15%, is far less than the more than 300% return achieved by the Mars Fund in the past year.
But the most important thing is that this fixed-income fund product can protect the principal!
As we all know, high returns must correspond to high risks.
Therefore, those who invest huge amounts of money often care most about not the super high rate of return, but the ability to make stable and continuous profits. As for the rate of return, they are already very satisfied if it can outperform inflation.
Depending on the different fund closure periods, from 1 year to 10 years, the Athena Fund can provide an annualized rate of return ranging from 10% to 15%, and also guarantees that the principal will not be lost, which is very attractive for large-scale investment.
What Barron introduced to them at that time was the Athena Fund that was about to be established.
You should know that the most critical point in quantitative trading is to accurately judge the general market trend of the financial products you invest in through analysis.
Perhaps the person who is most sure about this in the world is Barron, who has the memories of his past life.
Therefore, with his help and increasingly sophisticated mathematical models, Athena Fund would be considered a failure if its average annualized return was less than 50%...
He was fully confident that he could make his promise to investors to protect their principal at the beginning.
As for the latter...
With the success of the Athena Fund and the possible expansion of funds in the future, the promise of capital preservation will certainly not continue, but this will not affect investors' enthusiasm.
Just like Buffett's Berkshire Hathaway, when you can maintain a stable return of more than 15% for many years, investors will be able to break into your company's door.
So, under the guarantee of the capital preservation agreement, Anderson and Amway Group became the first two investors of the Athena Fund, and they will each invest US$50 million into the Athena Fund.
It should be noted that the minimum threshold for Athena fund investment is US$50 million. After all, this type of fixed-income fund product is designed for large funds.
Because it was the first time to invest in DS Capital's fund products, Anderson and Amway Group were a little cautious and only chose the minimum threshold of US$50 million for investment, which also brought US$100 million in initial funds to the Athena Fund.
In addition, the Kennedy family also brought another sum of money to the Athena Fund - the Boston Public Employees Retirement System (Boston PERS) will invest $100 million in this fund.
Whether it is Anderson, Amway Group, or Boston Public Employees Retirement Fund, they have all carefully chosen fund products with a one-year closed period, which will yield a fixed return of 10%.
You know, in the United States, general pension funds are required to earn an average annual return of 6.5%-7.5%, but because their investment portfolios often have certain losses, it is generally very difficult to achieve this rate of return.
Therefore, if the Boston Public Employees' Retirement Fund can get a 10% annualized return on its investment as guaranteed by the Athena Fund, then in the future they will definitely be able to get more investments similar to mutual funds.
In addition, the Kennedy family also invested $50 million of their own money in the Athena Fund, which is still closed for one year.
In this way, when the Athena Fund was first established, it received US$250 million in funds.
Of course, this is just the beginning, because in the United States, the Athena Fund has already received $250 million in funding, so in the UK...
You know, mutual funds like pensions in the UK are also huge in scale.
If private equity funds like the Mars Fund are shunned by mutual funds seeking stable returns because of their relatively high risk, then funds like the Athena Fund that provide fixed returns and can protect capital have always been popular with these large-scale mutual funds.
That is to say, the Athena Fund has just been established and has no outstanding achievements yet, so those mutual funds will not take risks blindly.
But even so, with Barron's network of connections in the UK, it was not difficult to obtain some investment from mutual funds.
Once his Athena Fund is able to generate stable profits and gets on the right track, I'm afraid huge amounts of capital will flock in.
According to Barron's arrangement, after the completion of its mathematical model, the current Athena Fund will be led by five fund analysts including Li Qing, each responsible for US$50 million in funds, to conduct quantitative trading on different financial investment products.
The profits of these five groups will be ranked regularly, and the top-ranked groups will be able to obtain a larger share of subsequent funds.
In addition to the five analysts, members with outstanding performance in the five groups will also have the opportunity to form their own group, thereby obtaining exclusive funding shares and the qualification to join the competition...
The bonuses of these groups will naturally be linked to the rates of return they ultimately obtain. Groups that are always ranked at the bottom will also be at risk of being eliminated in the end.
It can be said that this kind of competition is very cruel, but the financial industry itself is such a place. The income is much higher than that of other industries, but it is not so easy to get.
Under such internal competition, they continuously improved their mathematical models, ultimately enabling the Athena Fund to achieve stable and high profits.