Investor inflows to computer-powered “quantitative” hedge funds have halved this year to the most sluggish pace since 2009, after a spate of poor performance from many of the industry’s biggest players. So-called “quants” use a wide array of approaches, from taking advantage of tiny arbitrage opportunities in stock markets to surfing trends in commodity prices. But they all use powerful computers and complex algorithms to implement automated trading strategies. While Two Sigma, one of the biggest players in the industry with $56bn under management, has managed to recover from a poor start to the year and two big Renaissance Technologies funds are up roughly 3 per cent to 4 per cent this year, others have sagged precipitously.
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