The Truth About Working in Quant Finance with Nitish Maini, Chief Strategy Officer at WorldQuant

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Welcome to this exclusive episode with Nitish Mani, Chief Strategy Officer at World Quant Founded in 2007, World Quant is a leading global quantitative asset management firm with over $7 billion in assets under management. In this conversation, we dive into his journey from consulting to quant trading, the biggest misconceptions about the industry, and why creativity matters just as much as coding.

Netish shares how the firm is reshaping talent pipelines through initiatives like World Quant Brain and the International Quant Championship. So if you're an aspiring quant or just curious about markets, this one is for you. So let's get started. Hello, Netician, Really, really excited for this conversation because it's not very often where I get to talk to someone in your role as a Chief Strategy Officer, someone who works for World Quant and it's kind of ties to the hedge fund space.

So really appreciate your time and the insights I'm sure you're going to share. So for any listeners, the three areas that we're going to cover are going to be and the Tish's background and his career path, which has been particularly interesting because wasn't always quant finance, which we're we're about to find out. And then the evolution of quantitative finance and how it's changed and interested to get your views to Tish about where it's heading.

And then finally, world quant, yes, a lot of people would have heard of world quant, but not everyone. And there's this amazing competition you run that's just global and off the scales, off the charts. And I'd love to find out more. And there's lots of other resources as well that I know this is a growing space of interest for for students and young professionals, which I know you're going to share. So, yeah, welcome.

And perhaps you could take us back to the beginning and a brief summary of your your background from your childhood student days up to what you're doing today in your new role.

Thank you, Anthony. So I'm currently based in Connecticut, US, but I was born and bought up in Punjab, India, which is in North India. And then I trained myself for the competitive exam in India, which is called IIDGE, which is required to, you know, you need to pass and get a good rank in that exam to, to go graduate to go to one of the Indian Institute of Technologies, the IDs in India. So I was born and brought up in Punjab.

Then I went to IIT Kanpur where I studied an integrated undergrounds and masters in in economics. After graduating from the university, I joined McKinsey and Company. I was very interested in business strategy, spent some time there, but then change company moved to World Quant, which is much, you know, over a decade now, 13 years at World Quant as a researcher out of the India office in Mumbai. And then back in 2016 got an opportunity to move to US as a portfolio manager.

And then a little over five years ago, I was offered to work with the CEO of World Quantity, Gorzinski to build the vision and strategy of the company. And that's what I'm doing right now as a part of my strategy officer rule. I, you know, identify the key strategic initiatives that World Quant should run, come up with a short, medium and long term plans for our initiatives, decide on how we want to allocate resources of the firm across these initiatives.

Then I also manage the capital allocation across various portfolio managers at the firm and across these initiatives. In addition to that, we are big on creating opportunity for the talent globally. So in my role, I run initiatives like BRAIN and International Quant Championship, which we'll talk about later today to make this opportunity of quant finance available to talent across the globe.

Wow, so there's already a whole bunch of questions you're you're explaining that, but but the first one I actually jumped to mind was that I guess places like India and I wonder elsewhere in say Eastern Europe, I've heard as well. Is there is it a normal thing for for a student from those locations to then move to the US? And is that is that a common move or is it or not?

Yes, so. If you're talking specifically about quant finance, then I would say quant finance was considered a very niche industry where you have to be in one of the big financial hubs like US or London and you know then Singapore, Hong Kong. But if you are in other geographies, this information about quant finance as an opportunity was not really available. But lately say as world quant, we are running 27 offices and we are creating opportunity for the talent wherever they are.

So this opportunity is now global. So if somebody does not really want to move, it is now being made available to individuals who are interested in their locations instead of having to move. But moving is also an option. Like, you don't necessarily have to be in your hometowns in your home locations, but you can also move some of these territories, which are financial hubs, if you want to gain more exposure of how, say, Wall Street runs.

And also you mentioned McKinsey, you mentioned McKinsey and I know KPMG as well. And so I just wondered what drove the decision to pivot because I know a lot of students kind of tend to think that their commitment very early in their career will define them. But you've done a kind of consulting and then switched to quite a different area. So what? What drove that decision making for you? Yes, yeah.

So for background, I was interning at KPMG in Germany and then as my first job I joined McKinsey and company. One of my deep interests is in business strategy and McKinsey and other consulting firms offers you a chance to, you know, really practically execute that scale of designing strategies and making recommendations to your clients. But I was doing that role out of Delhi in India.

One of my very good friends, a very intelligent friend, happened to join World Quant and that is how I actually came to know about this industry. Quantitative finance. Who doesn't get intrigued by, you know, the stock markets and finance? We are all interested about it, but we also know how technology has made advancements over the

last two and three decades. And speaking to him, I realized that World Quant was one organization which was starting their operations in India. It was founded in 2007 and I joined it in 2012. It was one organization which was deeply involved with the financial markets, with the stock market, but was also utilizing the advancement in technologies with the stock market. So all of us may have seen how traditional trading used to work. You pick phones, you call, you

try to place orders. But we all know how finance, industry and stock markets are growing, the number of IP, OS that are happening, how global exchanges are coming up, the market caps are growing. But how much can a human really do? How many stocks can they analyse? How many decisions can they move? So what I learned was

quantitative finance was basically about writing systematic pieces of code to deploy your ideas across a large number of stocks. So you can create thousands and 10s of thousands of stock using an algorithm to systematically execute your idea. So that idea came to me as a very intriguing idea which I wanted to try, I wanted to test came across as very future oriented approach, something that was just starting in India. And fortunately I put myself to

the interview process. It was a nine month long interview process. I went through 14 rounds of interviews and I'm glad I I made through. And the whole idea was to benefit from the growing advancements in technologies and the growing size of the global financial markets. And World Quant as a quantitative management firm was really bringing these two things together led me to making this decision of switching the careers. Makes sense.

And on the back of this, then the roles that you you held were different. So there was a quant research role and then a portfolio management role. Couple things then on that. One is breaking down the roles and the differences of the skills required to facilitate each. And the second question on the back of that, do you have to be a researcher before being APM or or or not? I'm not actually sure how that works in practice. OK. So a few questions on that. What is a quant researcher?

A portfolio manager, then skills required and then is 1A prereq for the other. OK. When I was first introduced to this role of quant researcher from outside of old quant, I had thought that I will be sitting in front of the screen and just coding mathematical models. But when I joined old quant, I realized that there was such a big entrepreneurial element and creativity to this role of being

a quantitative researcher. Imagine that you think that you have an idea and if you will apply that idea to the stock market, you think that this idea can make money. And this is 1 idea. Now you can have a second idea, third idea, and a fourth idea. What a quant researcher is actually about is to think of those ideas of your own. And then there are plenty of data sources available out there. You think using which systematic data can I actually apply this idea?

You need to have the capability to convert that idea into an actual execution using some data and writing a piece of code. And then it is about tracking the performance of your ideas and continuously coming up with improvements to find more and more things to be a successful researcher. So that is a quantitative researcher role. After doing quant research, you have created so many signals. A portfolio manager has a few steps in how he does portfolio

management. First, he has to identify which signals out of the big pool of signals he wants to select to deploy the capital. Now, after selecting the signals, he has to combine those signals in an optimal way. Different signals have different ideas in them. So he has to decide on what idea do I want to take more risk on and on which ideas I want to take less risk on. And then he has to manage the risk which comes with it.

There are some systematic risk factors that exist out there, so they have to manage how exposed their final combination of alphas is true to risk. And after all of this done, there comes final decisions on what stocks and how much of them do we want to trade in the market. So as a portfolio manager, you are selecting the signals, you are combining the signals and then you are taking care of risks and other trading constraints before making the

strategy go live in the market. So that's what a portfolio manager does. So the skills required for both roles are relatively common. You need to have the ability to think of ideas to be able to write a little piece of code to implement those ideas. Your ability to be able to understand the patterns your out of sample performance. Improvise on your research as a researcher and a portfolio manager. It's fascinating.

And and can you educate me about is world quant that element you're talking about about creativity and entrepreneurialism. Like for some reason, rightly or wrongly, in my head, I have it that a quant hedge fund might have a particular strategy and then it's about strategy optimization, for example. But what you're talking about is a lot of freedom, a freedom to create, freedom to think test. Is that normal or is that a unique thing in the industry

context? Well, different funds have different structures in how they, you know, how they organize their talent and on what kinds of tasks. Some organizations may want the talent to work specifically on a particular kind of a problem and just keep thinking about that problem to improve and improve and improve just that problem statement. While there are others which provide a more broad opportunity to the talent to explore, also

allowing them to go deep. If they choose to go deep in any particular problem, they can go deep but also provide them the exposure of the breadth and transparency of the whole investment pipeline. World Quant fits more in the second category where we allow the talent to explore various domains we have and that is where World Quant quantity approach comes. We have a huge library of data sets. We believe in the creative

thinking of the talent. If we give one idea to a given researcher to say, a group of researchers, what we notice is different individuals will implement that idea in their own ways and we will get uncorrelated signals even though the original idea was the same. And this varies within our geography, but also varies more across geographies. So that is where we try to attract talent from across the globe because we get very creative and different thinking

from the talent. Yeah, that makes that makes complete sense. Thank you. And let's move on to the, the, the second segment, which is more about the evolution of, of, of quantitative finance. You kind of touched on this already so far in the conversation, but one was about, I think many students or, or professionals who work in finance, they're interested in

quant finance. But I just wondered, are there misconceptions because you've, you've talked about kind of mathematics and programming is that I'm assuming there's other roles that sit within the spectrum and and other complementary skill sets as well. So are there, what are some of the biggest myths about kind of working in quant finance do you think?

Yes. So I think maybe first touching a little bit on the evolution of quantitative finance over time and then demystifying some of these myths that exist out there. So, you know, going back say a decade, most of the resources required to do quantitative finance was not so easily available. The compute was so much more expensive. The hardware required to do this wasn't available out there. The amount of data required to build quantitative signals was

not available. So the ability of the talent to explore their ideas and do quantitative finance was not so easily available. But as the technology has advanced over time, the amount of data has exploded over time and the number of firms that have risen up across geographies in this space, like as of December 2023, there were over

400 quant fund funds. I think this opportunity became more mainstream because there are not easy ways to absorb so much data and growing stock markets, growing number of instruments and asset classes out there. So quantitative finance is becoming like a more important and a real thing for everybody to do to be successful. So this this evolution has led to a lot of talent focused on building themselves and generating the skills required to be a part of this industry too.

But while this is happening, like you say, there are myths that do I really have to have a PhD to be a quant? Do I have to have mathematics and computer science to be a PhD? So I shared with you in my introduction that I went through 14 rounds of interviews and nine month long process because world quant at that point used to hire mathematics, computer science and physics students and I was

an economist. So a lot of back and forth and discussions had to happen that how much can we venture out into

other domains. And today at World Quant, we employ talent from such varied departments, such varied geographies, such varied backgrounds. In terms of educations, yes, we have a large number of pH DS, but we also have a large number of undergrads from various disciplines who can actually present that they have the creativity and the scale and the urge to do this. So you do not necessarily have to have a PhD or mathematics background to make or be successful on these roles.

Another big myth about, you know, the question that we're usually asked about quant finance is, is AI going to take over the humans, you know, in this industry because artificial intelligence with latest LLM and everything. Is getting so intelligent that why do we even need the humans

anymore? So the analogy that I really like to give to answer this question is say we have to walk from point A to point B. The amount of time it will take for us to walk on our legs to go from point A to point B. What says, say if we have a bicycle and we ride a bicycle from point A to point B, we can be so much more efficient just because we have a tool, a technology which can make the human more efficient and be able to do more. So similar analogy applies in quant finance too.

Yes, there are tools, there is AI, there is machine learning, but these tools only make the humans more efficient, more productive to be able to deliver better results rather than being

replaced by them. So that's the myths. Yeah, that that intellectual diversity makes so much sense in the formula of the way that World Cron it seems is set up in that way. So thank you for that breakdown. I'm going to steal that analogy, if you don't mind, for future reference. That was great. OK, so let's let's move on and talk a little bit more about World Cron. I know you've kind of touched on it, but anything more colour you'd like to give about the

firm in itself? But then that we'd love to move on and talk about your your key platform, which is brain after. It sure, yes, I've been giving you analogy to understand the quant finance base using World Quant as an example, but to give a proper introduction to World Quant. World Quant is a quantitative asset management firm. It was founded in 2007 by Igor Tulcinski. We are headquartered here in Old Greenwich, CT, US and World Quant today has over 1000 employees across 27 offices.

Right from the beginning, our approach has been to create an opportunity for global for global talent. We think that different individuals think creatively and bring very specific kinds of creativity, innovation into how they approach solving the inefficiencies in the financial markets. I mentioned we have a huge focus towards quantity. We think quantity is quality. We design a large number of signals in our research

ecosystem. We have a large number of portfolio managers who create thousands of strategies combining these millions of signals. So that is a brief introduction about World Quant, our presence and the way our investment pipeline is is organized. Yeah. And then and then Brain to start things off. So there's three things I want to get out of the rest of our our time together, which is Brain the platform and then also learn to quant.

I I saw your face on a number of really high quality videos that have just been released on YouTube and then also the International Quant Championship. So perhaps we can start with what is Brain for those who've never come across it. Yes. World Quant Brain is our signal crowdsourcing initiative. So one of the tag lines that we have is that talent is global, but opportunity is not. And we want to make that

opportunity available globally. So the tool that World Quant has created to make that opportunity available globally is World Quant Brain. World Quant Brain allows individuals to participate by learning skills of quantitative finance, then deploying those skills on the web-based platform called Brain to create some alpha signals and prove that

they have the ability or the skill set to be able to do it. And in return, we offer consulting positions, internship positions, full time job opportunities. So as of today, World Quant Brain has over 150,000 individuals from across the globe on the platform. And the whole idea is that there is so much talent across the

globe. We want to give them an opportunity to learn about quantitative finance, get them engaged on the platform and then successful quants at World Quant run regular trainings, tutorials, classes to educate the individuals who are on the brain platform. And so far we have hired over 60 individuals since the inception of the platform for full time roles at the company. And it has also become like a very important tool for us to identify good talent to work full time at the organization as

well. If I was a student then listening to this, how would exactly would I go about getting access to welcome brain? So you can search on Google Worldconbrain. You just have to sign on onto the platform. It sends your application to be on the platform. So you go on the platform and roll yourself. You start reading some of the tutorials and educational material on the platform. Start trying some of your ideas using a very simple expression language. You don't really have to code on

the platform. We have made it much easier to to implement the ideas on this platform. And then there are some threshold levels you grow through. Bronze level, silver level reach the gold level. Am I too old, in my 40s or? Everybody is welcome. Anybody who's interested is welcome. Given how interested and number

of ideas you talk about the financial markets in your in your podcasts, Anthony, I think it makes you a very creative individual full of ideas to try this. You should. So anybody is eligible, irrespective of age or backgrounds, to to participate in this. Yeah, that's that's super cool. I love, I love that tagline of it as well. So is the Learn to Quant YouTube series, is that like an onboarding or precursor to get you then into brain?

Would you suggest that's a good route for people to take? Yes, so we as world quant, we were analysing, you know that quant finance is definitely becoming important. Our mission to develop talent who knows about quant finance and wants to build careers here. But we noticed that there was no systematic practical series sitting out there which gives a good introduction to, you know, various individuals who want to learn what quant finance is and how is it very difficult.

Can I try it? So we thought, why don't we create say some videos which can small 5 minute videos which can give them introduction into what is quantitative finance. Then show them some ideas by using various data sets or some kind of common approaches that exist out there which help them implement their ideas. So we did that in those videos to make them understand that yes, it sounds very difficult but if you are disciplined, it is doable.

So those videos give them that introduction plus also teaches them some core skills required to be a quant, like how to manage risk, how to diversify your pool of signals, and how quant finance incorporates lots of advancements in data technology financial market as as an industry which interested individuals may want to understand as they make their

career choices. OK, for for anyone listening, I'll save that Google search and I will put all of the links to everything that's being mentioned in the show notes. So you just need to go to the show notes to the hyperlink to get to the learn to quant YouTube channel on the world Quant channel. But finally, I'd like to know a bit more about the International Quant Championship because when I first found out and, and explored this myself, I was like, wow, this is another level.

It's like, feels like the World Cup of quantitative finance. So can you explain? Can you just give me some context of the size of this thing and then talk about its purpose and how it works? Yes. So yesterday we launched the 5th iteration of the International Quan Championship. So like I mentioned for World Quan Brain, the goal is to reach out to all the talent out there to help explore. But how do we reach out to the talent and tell them that an opportunity like World Quan

Brain exists for them? And we thought competitions is a great way of bringing attention of the talent out there to try and explore this idea. And there is a little story behind this. When I was a student back in IIT Kanpur, I had an opportunity to participate in a global competition representing my university, my country. And being on that stage was such a great feeling which I still remember. And I thought, why don't I replicate a similar feeling for a large number of individuals

across the globe? That is how we came up with this

idea of International Quad Championship. It's a three stage event today. The first stage is a university level where individuals from the university and rules start competing. The second stage is a national level. The best teams from the top universities in Stage 1 qualify at the country round, the national level to identify the national winner and then there is a third stage, which is the international round to identify

the international quad champion. So that is where the winning country teams come compete at the finals. We've mostly organized it in Singapore. That is where the finals is is organized and that is how it's a three stage competition. In terms of scale, last year we had over 37,000 participants from 5000 plus universities, 180 countries and roll into this contest and there are very successful stories from participants of of this contest

and the winners. So we are, although we are just launching the 5th iteration, but we really hope that we are able to attract more and more people through this competition to try their hands on this quantitative finance opportunity. I'm just curious because our audience of this podcast, this show, they come from a large portion in the UK, in Europe, in North America, there's some in South Asia.

So in the last four years, is there any patterns of performance on who tends to perform well from a geography perspective? I'm just curious. Yes, I would say the competition is very stiff. There is not necessarily one country or one continent which has outperformed. We have continued to surprise ourselves with the with the show that the talent puts out there on the stage in the finals. The first iteration of IQC, we had two women from from Paris, France win the contest.

The following year we had individuals from Taiwan win the contest. And in the other years we've seen winners from UK, we have seen winners from US, we have seen winners from Indonesia and India. So it's very diversified in the top three ranks. You will see a very good diversity of talent. It's amazing. All right, Well, Nitish, it's been, it's been awesome chatting with you. Definitely really enjoyed when you were deconstructing, explaining the roles specifically because you've

experienced them. I think. Well, quant as a business sounds super interesting in terms of how it's set up. And yeah, I applaud you and the firm for putting together these fabulous resources, which I will put in the show notes. So I encourage everyone to to check them out. But Latish, thank you for your time and for talking to me. Thank you Anthony for having me as well.