Quant funds run one third of hedge fund assets

Date: Thursday, April 11, 2013
Author: Tommy Wilkes, Reuters

Quantitative fund assets rise to $677 bln

* Growth in computer-driven funds beats all hedge funds

LONDON, April 10 (Reuters) - Funds employing mathematical formulas and computer models that dictate when to buy and sell securities now control close to a third of the assets in the $2.3 trillion hedge fund industry, new data shows.

These so-called "quant" or quantitative funds attracted more than nine in every $10 of net new money that went into hedge funds last year, according to data from industry tracker Hedge Fund Research, boosting their share of assets to 30 percent from about a quarter four years ago.

Many of these funds have enjoyed explosive growth in assets since the 2008 financial crisis, when systematic funds made 18 percent returns on average in the midst of a market rout that shook confidence in human traders' ability to navigate increasingly unpredictable events.

Quant funds' assets in the aggregate continue to grow at a faster rate than their rivals, with a more than two-thirds increase since 2009 versus a 40 percent rise for the industry.

In 2012, investors poured in $34.4 billion more than they took out of the hedge funds, according to the HFR data, and quant funds took $33.1 billion of this.