Quant funds blamed for driving Chinese equities slump, but data shows they were net buyers

Some investors accuse quant funds of accelerating the July decline through share dumping, reigniting suspicions rooted in the 2015 crash Industry data, however, tells a different story. Several major quant funds were net buyers during some of the market’s weakest sessions this month, according to the Private Securities Investment Fund Professional Committee under the China Securities Investment Fund Association, as reported by domestic media last week. Market participants said the buying pattern reflected the way quantitative strategies were designed to operate. “Quant funds actually provide market liquidity rather than making one-sided directional bets,” said Wang Zheng, chief investment officer at Shanghai-based venture capital investment firm Jingxi Investment Management. However, he noted that similarities among quantitative models could sometimes amplify market movements.

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