Quants Are Facing a Crisis of Confidence
- October compounded miserable year for many quant strategies
- Signs of retail cash leaving funds as institutions stand pat
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Wall Street’s quant wizards often argue that many of their math-driven strategies are designed for the long-term. But they’ve rarely had to shout this loud.
Global equities posted the worst run in six years in “Red October,” and it tore through the investing styles that slice and dice assets based on traits like momentum and growth. Most factor funds, as they are known, fell in concert with stocks. That not only capped an already miserable year, it threw into doubt their diversification benefits -- forcing advocates onto the defensive.