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Hedge funds have been giving vast sums to academia this last year. In February Ken Griffin, founder of Chicago–based hedge fund firm Citadel, donated $150 million to Harvard College, the biggest single gift to the college ever. Michael Hintze, head of London–headquartered hedge fund firm CQS, donated £1.5 million ($2.5 million) to Oxford University, to help search the universe for invisible dark matter and dark energy. These followed Jersey–based hedge fund firm Brevan Howard’s £20.1 million donation to Imperial College Business School last year and the £4.5m to Oxford University’s Saïd Business School from Bill Ackman, the activist investor CEO of New York hedge fund firm Pershing Square Capital Management.

University coffers seem to be awash with hedge fund money. But more recently there has been a new trend to harness academic research with investment returns.

In February Capital Fund Management (CFM), one of France’s largest hedge fund firms, which manages $4.5 billion, announced a formal partnership with Imperial College London to create the CFM-Imperial Institute of Quantitative Finance, which will explore new directions in the modeling of risks in financial markets. To promote academic inquiry into finance, CFM is funding a postdoctoral fellowship, stipends for doctorate-level students and a program for visiting international scholars, as well as a series of seminars and conferences.

The project is a solid fit for CFM, the company of which physicist Jean-Philippe Bouchaud is chair, a leading figure among quantitative hedge fund firms. “Finance is as important for humans as nuclear science and pharmaceutical research,” says Bouchaud. “Academia and finance are two separate things. But the gap is getting narrower; this tie-up is proof of that. It’s time to stop warring and get the best of both insights.”

As well as overseeing CFM, Bouchaud teaches physics at the Ecole Polytechnique in Paris and has published several books and more than 250 scientific papers on physics and finance. He is also a well-known proponent of econophysics, the study of economics using statistical theories and methods developed by physicists. The firm’s teaching connections have helped CFM to bring 40 scientists on staff out of its 140 employees, many of whom have come from the ranks of higher education.

The urge to marry finance and academia is nothing new. Economics has leaned on physics for a variety of model equations, such as for earthquake prediction and chaos theory. Even the Black-Scholes-Merton option pricing formula,which won Myron Scholes and Robert Merton the 1997 Nobel Memorial Prize in Economic Sciences, shares its derivation with the heat equation in physics. (The formula was first published in a 1973 paper and was co-created by Fischer Black, who died in 1995 and was thus ineligible for the Nobel.)