Rather than grasping for straws in the face of lackluster market conditions, fundamental equity and multistrategy hedge fund managers are grabbing quantitative specialists to help them interpret macro trends and hopefully improve returns.
Hedge fund managers as large as Tudor Investment Corp., with $11 billion under management, have brought in teams of experts to help portfolio managers better understand complex market data and to improve real-time trading.
Megamanager BlackRock Inc., with $4.89 trillion under management, decided in January to combine its $200 million active fundamental equity strategy business, including hedge funds and hedge funds of funds, with its $80 billion scientific — quantitative — active equity unit, according to a memo to employees.
“In a market environment characterized by more volatility, lower beta and increased dispersion, clients are increasingly looking for active equity solutions irrespective of whether they are fundamental or quantitative strategies,” the memo said.
Hedge fund-of-funds specialist Blackstone Alternative Asset Management also has been looking for ways that quantitative approaches might help its investment processes.
The result so far has been the automation of elements that “computers can do more efficiently than humans,” said Gideon Berger, senior managing director and head of risk management at BAAM, which manages $68.6 billion in hedge funds of funds and customized portfolios.