Quant hedge funds clawed back some July losses after a brutal summer
After weeks of minor losses that one fund executive described as a " long, slow bleed," systematic funds ended July with a strong week, according to a note sent by Morgan Stanley to clients after trading last Thursday.
The note stated that July's final week clawed back roughly 30% of quant losses for the month, "softening the blow for what's otherwise been a strong year." A note from Goldman Sachs' prime brokerage unit said stock-picking quants ended July down 2%, bringing the average fund's annual return to less than 10%.
This figure still bests the average hedge fund and the S&P 500 over the same timeframe, but the summer slowdown put the brakes on what had been shaping up to be a great year.
At London-based Qube Research & Technologies, the fast-growing quant firm fell 4.5% in its flagship fund in July, a person close to the firm told Business Insider, clawing back some losses in the last week of July. The fund is still up more than 13% for the year.
Engineers Gate, the $4 billion manager, ended May up 12%, but lost more than 4% in July, a person close to the firm said. Its 2025 returns now sit at 7.1% through July after a strong close to the month.
Man Group's multistrategy quant strategy, AHL Dimension, lost more than 3% in July, the firm's website shows. The strategy is down close to 9% on the year. Walleye's quant group was the worst performer of the firm's four strategies in July, the firm told investors in a recent update, but was still positive thanks to Asian strategies offsetting losses in the US.
The managers declined to comment.
Since the start of June, a combination of factors, including a momentum sell-off and crowded trades, have stung quant managers. Still, many in the industry were anticipating a significant bounce-back once things reverted.
"We think strong hands should be levering up into this headwind," a mid-July note from former Bridgewater investment committee member and Dark Forest Technologies founder Jacob Kline read.
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