Nov 4, 2026 · 52 min
Quantedge bets bigger risk can build stronger returns
OI25: What If Lower Volatility Is the Wrong Goal ft. Suhaimi Zainul-Abidin
The episode tests whether institutional investors’ preference for low volatility overlooks the return potential of broadly diversified portfolios that can bear more risk.
- 1Quantedge combines roughly 300 markets and hundreds of risk premia to pursue returns through diversification rather than lower portfolio risk.
- 2The firm targets approximately 25% volatility, arguing that investors should take risk when diversification and monitoring provide sufficient capacity to bear it.
- 3Longer investor lockups align capital with potentially extended drawdowns, a lesson reinforced by Quantedge’s experience in 2008 and during COVID-19.
Don't miss
Suhaimi explains why Quantedge deliberately targets approximately 25% volatility, turning the usual low-risk portfolio preference into the episode’s central question.
The brief
Suhaimi Zainul-Abidin traces Quantedge from a $3 million launch in 2006 to an approximately $8 billion systematic investment firm built around diversified risk premia.
Quantedge’s framework spans roughly 300 markets, including equities, commodities, and insurance-linked securities, combining many independent bets with positive expected returns.
The central challenge to conventional portfolio design is deliberate: Quantedge targets about 25% volatility, arguing that broad diversification can create capacity to bear more risk.
Insurance-linked securities, including catastrophe bonds, add unusual negatively skewed exposures whose risks are diversified across perils and geographies and kept below 10% of portfolio risk.
The firm’s longer lockups reflect a hard lesson: high-risk strategies can endure substantial drawdowns, and investor liquidity must match the time required to recover.
Suhaimi compares Quantedge’s difficult 2008 experience with the compressed turmoil of March 2020, showing how crisis speed changes the demands on risk management.
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