Why China's 'goddess' of quants isn't fazed by global fund giants

International News

As China opens its $15 trillion asset management industry to the world, some of the biggest names in quantitative investing are racing to put money to work.Li Xiaowei has a nearly 10-year head start.
Known in local trading circles as the “goddess of quants,” the 49-year-old Stanford PhD started China’s first enhanced index fund in December 2009 and has trounced the market by 56 percentage points since the product’s inception. She sees little reason to worry about losing her edge as overseas giants from BlackRock Inc. to D.E. Shaw & Co. expand in China.

“Foreign institutions are quite sophisticated,” said Li, who joined Shanghai-based Fullgoal Fund Management Co. after three years as head of Greater China active equity investment at Barclays Global Investors in San Francisco. “But in enhanced index funds, I don’t think they can do any better than us.”

Li, one of the most high-profile Chinese money managers to return home after working for a major international investment firm, has spent a decade honing an approach that beat the benchmark index in all but two of the past 10 years. Her confidence underscores a sometimes overlooked challenge for overseas quants who view China as an inefficient market ripe for the picking: The local competition is nothing to scoff at.

In an interview at her office in Shanghai’s Lujiazui financial district, Li discussed the state of China’s 300 billion yuan ($45 billion) quant industry, the development of the country’s capital markets and her experience as a woman in the male-dominated world of asset management. Comments have been edited and condensed.

On the growth of quant funds:


 Ten years ago, there was no quant investing in China and even institutional investors had no idea what it was. I joined Fullgoal in June 2009 and we had to issue our first product by December.