The year-end private fund market typically enters a quieter phase. However, while most institutions are busy wrapping up, reviewing, and slowing their pace, an unexpected fundraising move has revealed unusual signals through distribution channels.
Information from channels indicates that a top-tier foreign hedge fund, through the relaunch of its flagship product in the mainland market, has joined the ranks of foreign private fund managers with assets exceeding 10 billion yuan. Has foreign quantitative investing in China finally moved beyond the exploratory stage?
**Year-End Fundraising** On December 15, foreign hedge fund Two Sigma Investments launched a new round of product fundraising in the mainland market. It was learned that this fundraising involved leading brokerages such as CITIC Securities and CICC Wealth Management as distribution channels. This marks another concentrated fundraising effort by Two Sigma since early November when it began issuing related products.
In the onshore expansion path of foreign hedge funds, the choice of distribution channels often carries more significance than the fundraising pace itself. Partnering with top institutions like CITIC Securities and CICC Wealth Management is almost a "standard practice" for most foreign asset managers entering the Chinese market.
The product being raised by Two Sigma primarily focuses on a CSI 500 Index Enhanced strategy, supplemented by a small allocation to commodity futures CTA strategies. In simpler terms, this hybrid product design positions the CSI 500 Index Enhanced strategy as the foundation, while the CTA strategy serves to smooth returns. This suggests that the foreign hedge fund is not steering client funds entirely toward high-frequency trading but opting for a slower approach—index strategies for directional returns and CTA for risk mitigation.
Due to limited information, the specifics of Two Sigma’s latest fundraising round remain unclear.
**Background Check** According to regulatory filings, Two Sigma Investments was established in November 2018 as a wholly foreign-owned private securities manager set up by Two Sigma in mainland China. Its business framework serves as the onshore platform for its parent company’s quantitative strategies in the Chinese market.
Two Sigma has long been a core player in the global quantitative hedge fund arena, with assets under management (AUM) once reaching tens of billions of dollars. However, the firm has recently faced an "unstable narrative." Internal governance issues drew scrutiny from overseas regulators, leading to corrective measures. These disputes ultimately centered on the founder level, with public disagreements between co-founders over control and management direction persisting for years. This eventually prompted a substantial management reshuffle in recent years.
From an onshore perspective, Two Sigma Investments’ legal representative and general manager is Carissa L Xu, whose career spans both Chinese and international financial systems. She previously worked at notable institutions such as Xiangcai Securities, TEDA Manulife Fund, UBS Securities, and Fidelity Investments before joining Two Sigma’s Asia-Pacific division, where she oversees the overall management of onshore operations in China.
**Word Spreads of a Billion-Dollar Hedge Fund** Public disclosures show that Two Sigma Investments’ AUM, as filed with the Asset Management Association of China (AMAC), still falls within the 5–10 billion yuan range. The last update to this institutional information was on January 17, 2023, meaning it does not reflect recent business developments.
However, another set of data has emerged through distribution channels. Prior to this fundraising round, CICC Wealth Management mentioned in a related article that after raising over 1 billion yuan in November, Two Sigma’s AUM officially surpassed the 10 billion yuan threshold. Among onshore foreign hedge funds, it now ranks second only to Bridgewater China, which manages nearly 60 billion yuan in onshore RMB client assets.
This statement was not an official regulatory disclosure or a public announcement by Two Sigma but appeared in promotional content from a leading distribution channel.
**Scale Leap** Taking a longer view, Two Sigma’s growth trajectory in China holds significant reference value. In June 2021, a research report by Everbright Securities estimated Two Sigma’s AUM to be between 1–2 billion yuan. At that time, such foreign onshore platforms were largely in a trial phase, with limited scale and not yet part of mainstream allocation discussions.
Today, its AUM is explicitly described in the 10-billion-yuan tier—a tenfold increase. This shift did not stem from a single event but evolved alongside stabilized product structures, clarified channel relationships, and sustained client accumulation. This detail marks the first time Two Sigma’s latest scale has been "seen" in a more definitive manner.
From an industry perspective, such changes are not uncommon. They resemble a natural milestone for foreign hedge funds after completing a cycle of adaptation in the Chinese market.
**Local Strategy Adaptation** Research reveals that, based on product filing history, Two Sigma did not initially anchor itself to a single strategy in China but underwent a relatively clear process of strategic refinement. This refinement is closely tied to the competitive landscape of China’s quantitative industry.
Since its establishment, Two Sigma has filed only three private securities investment funds with AMAC—a modest number. Its earlier product, the Two Sigma China Multi-Asset No. 1, launched on August 31, 2021, was positioned as a multi-asset strategy. After operating for about two years, it was voluntarily liquidated, with updates completed in November 2023.
This was not a simple product failure. Globally, multi-asset strategies are common, particularly suited for long-term capital and highly institutionalized investors. However, China’s private fund market differs. Domestic quant firms have long dominated the stock-picking arena, where strategy logic is clear, performance is easily comparable, and consensus among capital, channels, and managers forms quickly.
In this competitive environment, while multi-asset strategies hold advantages in model complexity and theoretical potential, they often face the practical challenge of being "understandable but hard to compare" in China.
Subsequently, Two Sigma’s product direction noticeably narrowed. Newly filed products gradually returned to an index-enhanced framework, with its third product launched on April 26, 2023, featuring a more focused strategy that aligns with China’s most competitive—and mature—quantitative hedge fund battleground.
From an industry standpoint, such adjustments are unsurprising. For foreign quant firms, true onshore localization does not mean importing the most complex overseas models but selecting the most scalable approach while respecting local capital demands and competitive dynamics.
Against this backdrop, Two Sigma’s strategic pivot resembles a foreign quant firm’s realignment with China’s market realities, now capable of supporting a 10-billion-yuan operational scale.
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