While the global financial crisis hammered money managers and institutional investors alike a decade ago, it also paved the way for organizational changes that many contend left them leaner and meaner after the storm clouds lifted.
"In a way, the crisis gave me permission to start changing things," said Michael Even, who took the helm at Boston-based quant boutique Numeric Investors LLC in July 2006 — a moment when institutional demand for quantitative strategies was growing by leaps and bounds.
During the first 18 months of his tenure, with Numeric's assets under management surging to $16 billion from $11.5 billion, there wasn't much appetite for changing what was seen as a winning formula, said Mr. Even.
Then the feast turned to famine, and the flood of money that quant firms had put to work over the previous three to four years began to gush out.
In short order, the challenges of the job went from "telling clients why they couldn't have as much capacity as they wanted" in Numeric's new global market neutral offering to hearing clients say, "We're never going to hire a quant again," Mr. Even said.
Outflows from Numeric strategies began accelerating in mid-2008. Some long-term clients explained that, with trading disrupted or hampered in so many other asset classes, the company's big, diversified quant portfolios were one of the best sources of liquidity they could tap, Mr. Even said.
Numeric's $6 billion market-neutral business, used in portable alpha offerings, dropped to $1 billion in a matter of months, while the firm's total AUM fell to $4 billion at the bottom of the market.
Amid the carnage, Mr. Even said he was determined to use the challenges Numeric was facing to be "innovative and creative," pursuing changes that would make the firm stronger coming out of the crisis.
Changes made at that time included centralizing Numeric's research efforts, shifting from the product-specific research approach the firm had traditionally followed; upgrading the firm's approach to technology and deepening its interactions with clients. In addition, the firm dedicated resources to coming out with white paper research reports, something that helped Numeric stay in front of prospective clients over the year or two following the crisis when institutional investors remained reluctant to consider quant strategies, he said.
Mr. Even said Numeric's employee ownership structure at the time helped it get through the crisis. The bonuses and pay of the firm's more junior people were kept "reasonably intact" while Numeric's partners tightened their belts, taking home a fraction of what they had been making before the crisis for the two to three years coming out of it, he said.
Mr. Even retired as chairman of the firm in October 2017.
The firm's latest filing with the Securities and Exchange Commission showed Numeric's AUM now at just less than $40 billion. Man Group PLC acquired Numeric in 2014.