Investors Looking to Quants for Fund Management Muscle

As hedge fund managers continue to grapple with losing dissatisfied clients, those funds more highly-focused on a computer-driven approach (so-called “quantitative” hedge funds) are standing out, the Financial Times reports.

According to FT, the flow of investor funds into the “quant” sector have more than doubled since 2009 (from $408 billion to nearly $880 billion). Several large hedge funds are increasing investments in quant strategies “as they search for new—and potentially more reliable—ways to produce returns.” Tony James, chief operating officer of Blackstone, was quoted as saying, “Frankly, we expect to see assets move from human managers to machine managers.”

Paloma Partners has added up to four teams a year to its quant-focused efforts, and Schonfeld Strategic Advisors currently boasts 19 quant teams on its platform. There are many more following the trend, although a source at one said, “any serious person in quant strategies would tell you there’s a limit to the amount of capital these strategies can successfully run.”