How Quant Funds Beat the Market by Being 'Early, Contrarian and Right'
Quantitative hedge funds have captured big trends in bonds and oil to outperform the stock market this year.
TL;DR
- Computer-driven trend-following hedge funds (CTAs) have outperformed the S&P 500 this year.
- CTAs use algorithms and machine learning to identify and trade large market trends.
- Their ability to short bonds and rates has been a key factor in their success.
- These funds profited from September's bond rout and oil's surge ahead of the Iran war.
- The breakdown of traditional 60/40 portfolio diversification has benefited CTAs.
- The Societe Generale’s SG CTA Index showed a 15.7% return in the first nine months, compared to the S&P 500's 11.7%.