The last five years have been mostly disappointing for quant investment managers, mediocre and inconsistent profits while stocks soar. But starting around six months ago, many quant strategies have delivered performance as good as any times in their histories. Is this a return to the good old days of consistent quant profits or a few lucky months to draw in return-chasing investors?
It’s important to understand that quant is not an asset class. Quant managers look for the same things qualitative managers do, and are exposed to the same market forces. Value managers, whether quant or qual, will do well when value is rewarded in the market, and badly during bubbles when the most overvalued stuff goes up the fastest. The same is true of quant macro, quant arb, quant momentum and other strategies.
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