Wall Street’s favorite new way of making money is selling sophisticated investing strategies to Main Street.
JPMorgan, Goldman Sachs, Morgan Stanley and other banks are competing to sell programs that systematically execute trades based on preset rules. Hedge funds and others have long deployed such quant-trading strategies, but now pension funds, endowments, family offices and others are embracing them.
Asset managers are also seeing a surge in interest in the strategies from wealthy investors.
Fueling interest in these trading products, which banks call quantitative investment strategies, or QIS: fear that traditional investment approaches can’t keep up in the age of artificial intelligence.
“The speed of the market is increasing, and we don’t have conviction about managers who mainly rely on fundamental analysis,” says Elmer Huh, chief investment officer of the Murdock Trust, a foundation in the Pacific Northwest. “We think we can adapt a lot quicker with a quantitative approach.”
Since December, the foundation has shifted 3% of its $2.1 billion investment portfolio to QIS funds managed by Goldman Sachs Asset Management.
Bank trading units now manage about $850 billion in QIS programs globally, up from $362 billion five years ago, according to Premialab, which helps institutions analyze systematic market-data strategies. These trades often rely on borrowed money, or leverage, to amplify returns, meaning they represent more than $1 trillion, enough to move markets, Premialab says.
Investors contact a salesperson or even go to a bank’s website and chose from various quant strategies. The banks do the trading for the clients.
JPMorgan’s markets unit, one of the biggest providers of QIS programs, manages over $100 billion in notional exposure to the trades—the face value of those positions. The bank has seen QIS revenue rise 30% so far this year from the same period in 2025, according to people close to the matter. That is an acceleration from the 25% growth seen in recent years, making it one of JPMorgan’s fastest-growing businesses.
Some investors, wary of all the money that has shifted to passive investing in indexes dominated by a few huge tech stocks, see active strategies like quant trading as a way to regain an edge. Others are trying to deal with volatile markets buffeted by war, tariff wars and uncertainty over the Federal Reserve’s interest-rate moves.
One QIS tactic: Using AI to digest earnings calls and quickly adjust portfolios with swaps or other instruments. Others are using QIS programs for protection. An investor might work with a bank to set up a strategy of buying puts or more complex stock-market protection on a regular basis, for example, rather than scrambling to buy a hedge when stocks get jittery.
At an industry conference in New York last year, Julio Delgado, chief investment strategist at the American Red Cross, said his organization now largely relies on QIS programs to make investments, rather than previous approaches, such as hiring internal traders and investing with hedge funds, according to someone in the audience.
Glenn Schorr, an analyst at Evercore ISI, flagged one reason banks are so excited to offer QIS programs.: “Portfolio managers and analysts cost money and get bonuses,” he says. “Computers don’t.”
Schorr says QIS programs represent “a decent portion of the growth” in the wealth channels of banks. Goldman Sachs Asset Management, for instance, manages about $175 billion in QIS funds, about 5% of its overall assets managed. Wealthy clients are turning to the banks for “tax-harvesting” trades that have soared in popularity and other sophisticated moves that can be challenging to set up on their own, Schorr says.
QIS programs, which are often structured as derivative contracts called total-return swaps, have ample risk. Quant returns have been uneven in recent years. And so much money is shifting to these strategies that some are at risk of becoming “overcrowded,” says Ramon Verastegui, founder of Kairos Investment Advisors. Too many investors doing the same trades can reduce potential profits.
Aggressive hedge funds have been trying to profit from the growth of QIS programs by anticipating their trades, says Arnab Sen, who developed QIS products at Barclays before joining Paloma Partners as a portfolio manager. These funds try to act before the QIS programs can, a cat-and-mouse game that can cause unusual movements in various investments.
“It exacerbates moves in the market,” Sen says.
Either way, the profits are piling up for the banks, which charge investors depending on the complexity of their trades. Moreover, QIS revenue is nearly risk free and generally reliable since the trades are preset. Banks also don’t have to set as much capital aside to back these trades as other kinds of trading or financing businesses.
Asset managers can charge QIS clients management fees and performance fees.
QIS programs are emerging as competitors for some hedge funds, says Adrien Géliot, chief executive officer of Premialab. Banks typically charge a bid-offer spread on whatever they are trading for investors.
Lately, some hedge funds have been asking banks to place QIS moves for them, as well, a sign of their growing popularity. A fund with a focus on equities, for example, might work with a bank to set up QIS trades in commodity markets, says Verastegui of Kairos Investment Advisors.
Write to Gregory Zuckerman at Gregory.Zuckerman@wsj.com