Liang Wenfeng on Quant Trading Future | Generated by AI

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Question: What did Liang Wenfeng say about quantitative trading in 2019, and what did he say at the conference meeting?

Answer:

Liang Wenfeng’s 2019 Speech on Quantitative Trading

The Event

On August 30, 2019, Liang Wenfeng — then head of High-Flyer — delivered a keynote speech titled “Outlook on the Future of Quantitative Investment in China” at the 10th China Private Fund Golden Bull Awards, specifically in the “Quantitative Investment and FinTech Sub-Forum.”

His presentation, filled with carefully curated data, explored the development of quantitative investment in China. The speech transcript went viral, being shared over 100,000 times in just a few days. It was also Liang’s first public roadshow. He did not discuss strategy or High-Flyer’s operations — instead, he shared his reflections on the development of quantitative investment in China, offering an educational introduction to the broader financial community.

Key Points He Made

1. What Is Quantitative Investment — The True Definition

Liang rejected several common misconceptions. He argued that quant investing is not simply “automated trading” (many quant firms place trades manually), nor “using quantitative methods for research” (almost everyone does that), nor “subjective managers focusing on individual stocks while quant managers don’t” (High-Flyer itself studies individual stocks carefully).

The real distinction, he said, is how investment decisions are made: by quantitative (program-based) methods or by human judgment. In quant firms, there is no traditional “portfolio manager” — the portfolio manager is essentially a cluster of servers. When humans decide, it is an art relying on intuition; when a program decides, it is a science aiming for an optimal solution.

2. Algorithms Already Surpass Humans

He made a bold assertion: from a technical standpoint, “programs already far surpass most human capabilities.” He stated that in 2019, algorithms in technical strategies had already far surpassed most human experts, and over time it would only get harder for human traders because algorithms keep getting better.

3. Quant Funds Follow Moore’s Law

He argued that the quant private fund industry progresses roughly in line with Moore’s Law — doubling in investment capability every 18 months. However, average fund performance hasn’t doubled because the market itself has been growing more efficient in tandem, absorbing those gains.

4. Where Quant Profits Come From

He explained that quant funds earn the money that used to be made by traditional human (discretionary) investors — particularly from the technical analysis camp. Market inefficiencies that were once exploited by human technical traders have now been largely captured by hundreds of billions in quant strategies, increasing overall market efficiency.

5. China’s Quant Market Has Huge Room to Grow

Looking at the U.S. as a model, he observed that quant funds like Bridgewater manage around 1 trillion RMB, while large Chinese quant firms at the time only managed 10–20 billion RMB. He believed it was absolutely possible for a Chinese private fund to one day manage 1 trillion RMB, as China’s economy would eventually reach parity with the U.S.

6. Evolution of Strategy Frameworks in China

He noted that before 2017, multi-factor models were the dominant framework in Chinese quant investing. By 2017, it became very difficult to discover truly innovative factors. After that, the industry shifted and traditional multi-factor frameworks were gradually replaced by AI. By 2019, they began to be overtaken again by newer “ensemble” frameworks.

7. Mission: Improving Market Efficiency

He stated High-Flyer’s mission was to improve the efficiency of China’s secondary markets, predicting that quantitative investing would increasingly encroach on the territory of fundamental analysis.

8. Post-Speech Vision

In an informal interview after the speech, he elaborated on his vision of an open-source strategy platform accessible to ordinary investors — a vision later echoed in 2024 when, as founder of DeepSeek, he emphasized making AI and related technologies inclusive and affordable for all.

Summary

This 2019 speech was Liang Wenfeng’s first major public appearance and was regarded as a landmark address in China’s financial community. Rather than promoting his own fund, he used it to educate the industry on what quantitative investing truly is, how it is evolving, and why AI-driven decision-making is inevitably replacing human judgment in markets — a philosophy that directly foreshadowed his later work in building DeepSeek.

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