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What are China’s quantitative trading funds, and why are they so controversial?
China’s quant funds face scrutiny from retail traders and regulators, driven by their large returns and use of AI
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For years, quantitative trading was the undisputed darling of China’s stock market, using sophisticated algorithms and artificial intelligence to deliver eye-popping returns and grow into one of the most powerful drivers of trading volume and liquidity, even as traditional, discretionary stock-pickers struggled to keep pace.
Yet that rise has also stirred growing controversy, particularly during periods of market turmoil, when critics argue that computer-driven strategies exacerbated volatility in a market still dominated by more than 250 million retail investors.
How big is China’s quant sector?
The country’s quant industry has grown rapidly in recent years. Quant-focused private funds exceeded 3 trillion yuan (US$444.68 billion) in size last year, according to Zheshang Securities.
The number of quant funds managing more than 10 billion yuan rose from 55 at the end of 2025 to over 70 by June of this year, accounting for about half of all China-based funds above that threshold.
Key players in China
Leading players include Hangzhou-based High-Flyer, which trades only its own capital and gained global attention for developing AI trading systems and supporting the fast-rising tech start-up DeepSeek.
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