This report analyses the flow of talent into and out of the quant trading industry during 2021. We used a sample universe of the top 93 hedge funds and prop trading firms that employ quantitative trading strategies (list at bottom).
We focused on individuals that had either joined or left our sample universe during 2021 and the industries they had joined or left. We broke industries down as follows:
We segmented the Financial Industry into Banks, Insurance, Other and split Asset Management into firms within our sample Universe and firms outside. Also, please note we have included crypto/defi within the financial category however will be conducting additional analysis on this topic in a future report as we have noticed anecdotally a trend in movement to the crypto industry.
- The number of individuals joining our sample universe during 2021 was 8,168. We were able to determine the individuals previous industry for 4,640 (57%) of this group. There were 1,467 internal moves within the universe and 3,174 from outside of the sample.
- The number of individuals leaving our sample universe during 2021 was 4,560. We were able to determine the industry individuals were joining for 1,842 (41%) of this group. Please note, notice periods and non-competes plus a general delay updating profiles contributed to this lower sample. There were 647 internal moves within the universe and 1,195 leaving the sample universe.
Talent flow in
Given the incestuous nature of finance, it’s unsurprising the majority (70%) of joiners previous firms were already within the finance industry with nearly a third (32%) moving within the sample universe. The tech industry did account for some talent flowing into the sample universe, as did professional services. The 7% attributed to Academia / Education was predominantly new graduates joining the industry.
The biggest difference across regions was in the graduate hiring. Asia and Europe were significantly down on Australia and the US. Our best explanation is that Covid restrictions may have played a part here with very little mobility in 2021. It’s also worth noting the homogeny of the talent pool in Asia (41%) and Europe (38%) of new joiners coming from within the sample universe. The inflow of talent in North America was the most evenly distributed.
Talent Flow Out
Over a third (35%) moved from one firm to another within the sample universe with 65% remaining within the finance industry. We don’t have statistics from other industries but given the specialized nature of finance it’s unsurprising that 2 out of every 3 people remains within the industry. Another occupational hazard of the quant trading industry, long notice periods and non-competes, means nearly 1 in 10 leavers were sat out at the end of 2021. Interestingly 17% moved out of finance into the tech industry (which as a % is slightly higher than incoming although on a numbers basis it was only 317 out versus 655 in.
On a regional basis there was a big shift in Asia from the finance industry into tech. The growth of tech firms in India and China fuelling a lot of this movement out of the industry. Conversely, movement was a lot more incestuous in Europe with almost three quarter remaining within finance.
Talent Flow by functional area
Rather boringly, almost 9 out of 10 Investment focused individuals remained within the industry. The trend from the sell onto buy side was similar across the three functional areas. The tech industry being the alternative destination, both to and from, for software and infrastructure engineers.
For brevity's sake we have excluded more detailed reporting at the firm level and across other functional areas however if you would like to receive a copy of the full report please get in touch.
Sample Universe List