To quote a thought piece by my colleague, Tim Wilkinson, written several years ago[1]: “Quant is not a strategy”. Instead, it’s a way of implementing an investment process. Thinking of Quant as a single hedge fund strategy is like thinking of fundamental investing as a single strategy. If someone told you that “Fundamental did poorly last year”, you would pull them up on it. Do they mean Equity Long/Short? Equity Long-biased? Credit? Commodities? There are different fundamental hedge fund strategies – and the same is true of Quant strategies.
During the period October 2014 to December 2017 our Hedge Fund Data Engine[2] showed a huge influx of assets into the Quant space with a notable stagnation, or even a slight reduction since December 2017 to close out the five year period. Many newcomers may be left wondering what all the fuss was about, as headline returns have not exactly been stellar. However, if we scratch beneath the surface and break down the Quant universe, it soon becomes clear that there is significant dispersion – with some Quant strategies consistently outperforming others.
