Goldman’s Rebuilt Quant Approach

When quantitative equity funds experienced a meltdown ten years ago, Goldman Sachs (among the hardest hit) “began to rebuild the strategies with less leverage and more diversity,” according to a recent Bloomberg article. “A decade later,” the article says, “the quant unit has clawed itself back to respectability,” and now manages about $110 billion. But the team faces stiff competition, “with almost every asset manager chasing quant money, betting on similar factors and shaving fees… Read More

Jason Zweig: Use Simple Tests Before Investing in a Quant Fund

In a recent article for the Wall Street Journal, Jason Zweig offers some tips on how an investor can devise his own quant strategy. “Perhaps it is cheaper to learn from the quants than to hire them,” he argues. Zweig shares findings of a Duke University group of researchers that found, during the period from 1996 to 2014, “systematic funds (which describe themselves with such words as ‘algorithmic’, ‘computer-driven’, or ‘statistical’) performed about the same… Read More

Quant Strategies Are Not Magic

 The flow of funds into the quant investment strategies continues but, like most new ideas, this one doesn’t come without caveats, writes Validea CEO John Reese in a recent Forbes article. Reese argues how quant strategies shouldn’t be considered a magic bullet, but rather a tool to thwart an emotional approach to investing. He underscores the advantage of the type of blended approach used by Validea, and identifies the following picks identified using his stock… Read More

Stock-Pickers Beware: Bots Are Here

BlackRock’s March announcement that the firm had reduced its staff of stock pickers to increase its focus on quant strategies may support the consensus that “active management is dying,” but Bloomberg columnist Nir Kaissar argues that “the problem is not that active managers fail to outperform the market; it’s that they keep that outperformance for themselves through high fees.” “Smart beta” index funds, on the other hand, have been able to beat the market at… Read More

Twitter and the Fed

Research shows that trading strategies built around tweets in the days preceding Fed meetings have been profitable, writes Steve Russolillo in this week’s The Wall Street Journal. As the use of quantitative investment strategies continues to rise, social-media platforms such as Twitter have become popular sources of intel to gauge investor sentiment, says Russolillo, referring to the frequency and impact of the president elect’s tweets since the election. A study conducted by Andrew Lo, a… Read More

Quant Strategies Continue to Evolve

While the financial crisis of 2007 spurred a lot of questions regarding the role that quantitative investment strategies played in the market’s drop, these strategies continue to evolve, writes Validea CEO John Reese in this week’s Forbes. Reese gives an overview of the evolution of quant investing, which has been used for decades, and the more recent move toward incorporating big data. He points out, however, that there are concerns related to data accuracy and… Read More

Big Data Doesn’t Automatically Mean Big Investment Returns

The quant craze in investing doesn’t come without its own set of challenges, says a recent Bloomberg article. As hedge funds delve headlong into the data world to hoist up returns and stay competitive, some may lack the prowess necessary to harvest relevant and accurate numbers, says Matei Zatreanu, who led the charge at $19 billion hedge fund King Street Capital Management. “There are those who realize their industry is changing and their fund isn’t… Read More

Quant Strategy Pros and Cons

Anthony Ledford, chief scientist at U.K.-based investment management firm Man AHL, has mixed feelings regarding the hype around quantitative models and their potential impact on the hedge fund industry. In a recent Bloomberg article, Ledford (who holds a Ph.D. in mathematics) says, “There is some real science here, but it’s not the way it’s been portrayed. Some of it is really marketing, and that’s the bit that annoys me.” The article asserts that the recent… Read More

Stock Picks Based on Quant Strategies

As hedge funds continue to lose clients due to lackluster returns, purely numbers-based investment strategies are gaining popularity. Validea CEO John Reese speaks to the trend in a Nasdaq article published last week. Like those of our guru-based screening models, these strategies are built purely on the underlying fundamentals of a business. The following picks from our quant investment-based strategies of James O’Shaughnessy, Joel Greenblatt and Joseph Piotroski were identified: Thor Industries, Inc. (THO) manufactures… Read More

Hedge Funds Hungry for Quants

If you’re looking to land a job at a hedge fund, polish up your algorithm building and data mining skills to get to the front of the line. This according to a recent Bloomberg article that explains how hedge funds are hiring quants “like never before in search of an answer to lackluster returns.” King Street Capital Management and Tudor Investment Corp. are among the names anxious to beef up their data analysis and research… Read More