Year-end sprint at major quantitative firms

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At the end of the year, the asset management market often most easily reveals the true industry logic.

When the volatility of indexes comes to a temporary pause, investors start to tally their returns, distribution channels begin to sprint for scale, and fund managers make arrangements for next year's cash flow.

Quantitative private funds are now at such a window of time.

On one side, the market is oscillating between adjustment and rally; on the other, channels and managers are reassessing scale and pacing.

Against this backdrop, some rare old products have come back to center stage, and appear to have undergone a wave of “careful packaging.”

Quant Giants Absorbing Capital in Bulk

The year-end capital raising window often attracts star products from various institutions.

Wallstreetcn’s Capital Matters has learned that a well-known wealth management platform, known as the “Securities Firm Aristocrat,” has recently listed a series of quant products, mostly managed by top quantitative private firms, with at least three institutions each overseeing more than 50 billion yuan in AUM appearing simultaneously.

Among these, a major quant firm K is raising funds for its all-market stock picking strategy product, with related information appearing prominently on distribution platforms.

This is not a new product, but an old product that has been running for many years, falling within the scope of continuous marketing.

Public information shows that this product implemented a dividend at the end of September this year and adopted a “net value normalization” method, i.e., through cash distribution, adjusted the product NAV back to around 1 yuan.

Looking at the timeline, after completing the dividend, this product did not immediately launch large-scale promotion but returned to the channel fundraising spotlight after entering December.

Looking at this action alone, it does not in itself constitute an “anomaly,” but its appearance during this concentrated year-end fundraising window has drawn industry attention.

Year-End Sprint

Zooming out from a single product shows a clearer backdrop.

It is often not a coincidence that quantitative institutions raise funds intensively at the end of the year:

First, after the earlier adjustment in the A-share market, some fund managers have formed a new judgment on the strategy environment and hope to bring in fresh capital before year-end.

Second, fund distribution platforms such as brokers also face performance assessment pressure at year-end and are more inclined to push products with high market recognition and clear historical performance to achieve easy sale and scale effects.

In this context, high-performing quant products naturally become the top choice for both sides. This is when managers “want to raise funds” and channels find products “easy to sell” at the same time.

“Old Products” Take Center Stage

Dissecting the product structure further reveals more subtle tradeoffs.

In this round of fundraising, relevant securities firms did not focus on promoting K’s better-known CSI 500 or CSI 1000 index enhancement strategies but chose the all-market stock picking strategy (i.e., not benchmarked to broad-based indexes), which has broader coverage.

By comparison, other quant institutions participating in the year-end fundraising have chosen to launch new products (such as small-cap index enhancement) or use new strategies as selling points (such as statistical arbitrage), rather than continuing to push old products.

Different institutions are making different choices within the same window, reflecting their own judgments of strategy capacity, product lifecycle, and channel preferences.

This is akin to some institutions “putting out new dishes,” while others continue to sell their “signature bestsellers.”

Back on the Shelf after Dividend

So, Quant Giant K’s move to relaunch fundraising for a “net value normalized” old product after a dividend naturally arouses industry attention.

To understand this, we must go back to the dividend several months ago.

In mid-September this year, this quant institution implemented a dividend for the mentioned product, with the rule: “Divide according to unit net value normalized to a fixed value, and the unit NAV post-allocation is 1.0000.”

That is, it reset the product NAV from a high back to around 1 yuan in one go.

At the time of dividend distribution, the cumulative NAV return had almost reached 70%, with considerable book profits. For investors, this meant a choice: either realize these profits in cash, or reinvest the dividend into the product for future participation.

But from the manager’s perspective, this dividend also corresponds to another more crucial “financial arrangement.”

According to standard practices in quant private funds and hedge funds, at dividend or periodic settlements, the manager can levy a performance fee as per the agreed ratio, typically 20%, turning part of the paper profit into the income of the private institution.

It is precisely against this background that the product reappeared about three months after the dividend in a prominently recommended spot for fundraising.

Using New Shares to Extend an Old Strategy?

Following this difference, insiders have provided a more direct explanation.

A quant industry insider told Capital Matters: after a dividend, relaunching fundraising is essentially about using “new shares” to lock in the remaining usable runtime for the old strategy.

After the dividend, the product size temporarily drops, and the strategy’s operational burden reduces. When the quant strategy’s operation is “reconfirmed,” bringing in fresh capital is tantamount to mapping the already stable phase onto new capital.

If you miss this window, as the scale once again approaches the strategy’s capacity limit, the performance may deteriorate, and fundraising will become noticeably harder.

(As shown in the above chart) Clues can also be seen from net value data.

Since late October, the unit NAV of this product has hovered narrowly around 1 yuan; even with a brief pullback in November, recovery was quick. This performance in a low-NAV zone gives managers a time window to confirm the strategy’s status.

An Apparent “Win-Win” Arrangement

As this “old product” restarts fundraising, the relative positions of all parties in this transaction have changed.

Intuitively: After “net value normalization”, the product looks like it’s “on discount.”

For investors, a NAV near 1 yuan avoids the “psychological pressure” of buying at a high, shifting subscription decision-making to future strategy performance, rather than historical gains.

This kind of year-end “discount sale” may, in fact, benefit quant managers more.

An insider revealed: For some products, after the dividend, once the NAV returns to a low level, managers will use proprietary funds to reinvest in the next round of fundraising, which is similar to cashing in on existing profits and then continuing with the same strategy from a lower base.

For ordinary investors, the key is not about “cheapness” per se, but about truly understanding they are buying a new phase of an old strategy...

Obviously, this is an easy-to-understand industry reality!

Risk disclosure and disclaimerThe market involves risk, and investment needs to be prudent. This article does not constitute individual investment advice, nor does it consider the special investment objectives, financial conditions, or needs of particular users. Users should consider whether any opinions, views, or conclusions herein fit their specific circumstances. If investing based on this information, it is at their own risk. ```