(Alliance News) - Fund manager Man Group PLC on Wednesday reported a rise in funds under management in the first half, driven by a strong performance by the company's quant funds
"-like most everything else in life-worked well until they didn't.
On Monday, the Dow Jones Industrial Average tumbled by 1,600 points, the largest single day fall in history of crashes, and was aggravated by smart beta, passive, quant funds
and momentum investors, but fund managers say that crash in global markets was much needed after lofty valuations.
The "Quant Quake" of August 2007 started when many alpha-oriented quant funds
In addition to this, large quant funds
have established in-house data science teams performing deep exploration of newer and larger data, and now this trend is spreading to traditional asset managers as well.
Summary: Quant funds
use complex software to make buy/sell decisions.
In more recent years, pairs-trading quant funds
have looked for and exploited tiny market deviations, often caused by big selloffs and purchases.
Nevertheless, the news underscored the recent problems encountered by various "quant funds
", which trade on the basis of mathematical models.
So if you'd like your funds managed by facts rather than feelings, you do have an option: Invest in quant funds
. "Quant funds
select their portfolios solely on quantitative measures," says Kai Wiecking, a mutual fund analyst at Morningstar.
Very large quant funds
will have in-house data strategy teams who will often contact companies directly and then evaluate if their data sets are of interest for research purposes and for back testing and so on.
The firm fired over 30 active equity managers in March, Bloomberg reported, shifting its focus to quant funds
If we are lucky, these quant funds
might find it profitable to lease these fraud-finding algos to Facebook, Twitter and Google (unless it's more profitable for them to keep the code to themselves).