[100 Emerging Women Leaders] How Sonam Srivastava’s Wright Research uses data and quant models to drive smart investing

After completing a BTech in chemical engineering at IIT-Kanpur, Sonam Srivastava worked in Reliance Industries for a year before switching her career path.

The move would not have come at a more opportune time. While looking for tech roles in 2011, Srivastava started studying for CFA (chartered finance analyst) and was also preparing for the CAT exam.

“I learned more about quant finance in the process and it had just taken off in India. With the SEBI regulation on quant investing in 2010, there was considerable interest in the market. With my technical skills and knowledge of finance, I was able to crack my CFA,” she tells HerStory.

Quantitative finance, or quant finance, uses statistical and mathematical methods to analyse and predict financial markets.

Srivastava joined the investing space in 2012 with Forefront Capital, which was later acquired by Edelweiss. She worked there for four years in the algorithmic trading group, focusing on quantitative strategies and trading algorithms.

In 2016, she left Edelweiss to join HSBC to work on quant strategies on its London desk. In 2018, she joined US-based robo advisor startup, QPlum that was trying to set up an Alternate Investment Fund (AIF) in India.

“Within eight months of my joining, the company shut down. I decided I was not going to look for a job. With my skill set and experience, I decided to start Wright Research in 2019,” she says.

Believing in the potential of quant investing, Srivastava wanted to tap into a clientele comprising larger clients like HNIs and institutions, and also create access to anybody interested in it.

Srivastava breaks it down for us.

“Using our data and algorithms, we devise our own investment strategies to help people identify the set of stocks they can invest in. But how do you define that, what are you looking to, to select these stocks. Maybe the fundamentals of the company or the balance sheet, as data, price trends.. We explore different factors to identify stocks for our clients,” she explains.

Initially, Wright Research used the smallcase platform, a technical product that investors could use to invest in stock baskets. At the time, smallcase was opening up to external clients, and we had 25,000 active investors who invested into small case products.

“Later, we launched advanced products like the Portfolio Management Service, where we could take money for the client and manage it on their behalf. Using these two, we are currently managing an AUA of 1000+ crore.,” she adds.

Wright Research offers services in equity advisory, thematic portfolio subscription, mutual fund advisory, alternative advisory and existing portfolio review service, runs futures-based statistical arbitrage strategies for HNI clients and algorithmic models for trading futures and options.

Quant investing, a key trend

The company has managed more than a lakh clients over five years and currently has 25,000 active clients, who belong to the 25-40 years age group usually working in the tech industry.

“We offer a solution where we do the research and it’s an easy DIY platform for them. We have a lot of people who are more mature investors, looking at interesting products. Also with PMS, we now have family offices and around 350 HNI clients. We also have young people starting out with us,” says Srivastava.

In terms of consumer patterns, she points out that people no longer want to park their money in a fixed deposit and are looking at investing in the market. Also, quantitative investing, which is essentially data-driven investing, is the key trend.

Is the shift seeing a lot more women investing? Srivastava says among a 100 clients, there are hardly two to three women talking about investments.

“I think women are a little more concerned about risk. I think the media should play a greater role in educating people that with investment, they are not gambling their money. And, it’s a great source of wealth generation,” she elaborates.

However, she adds that a lot of women who invest on their own are really smart with it. But they are not extreme risk takers and end up taking slightly more conservative bets.

Srivastava has also collaborated with Learn App for a course that will help young people learn and apply a strategy based on momentum, which historically has been one of the strongest factors in the market, outperforming all other factors. The course explores the rationale behind momentum investing and why it works well in Indian markets.

Wright Research raised money through a pre-seed round from BSE Institute Limited Ryerson Technology startup Incubation Foundation (BRTSIF), Govt. of India, Nidhi SSS in 2020 and from Orios Venture Partners in 2022. It was listed among the top 50 AI gamechanger startups by NASSCOM.

Going forward, Srivastava wants to cash in on the goodwill from clients it has served so far, expand on it, and keep delivering consistent results.

Does she believe it’s challenging for a woman to start up in a nice space like quant investing?

“I won't say it is very difficult for a woman to start up in this space. A specific skill set is needed for it, and I don’t see a lot of women pursuing it. But women have good instincts for managing money and if they pursued it, they would be better than their male counterparts,” she says.

Her advice is simple, “If you like this space, have good ideas and believe you can create value for your clients, you should pursue it.”