Human-Run Hedge Funds Beat Quants In Pandemic
Hedge funds that use complex, automatic-trading strategies have been beating human stock-pickers for several years. But that all seemed to change in 2020, as wild market swings in all asset classes, driven by the virus-pandemic, along with an unprecedented flood of central bank money into capital markets has resulted in a year where human-run hedge funds trounced quants, according to Bloomberg.
Many of these so-called quants - Renaissance Institutional Diversified Alpha, Odey European, QAR Global Stock Selection, and Bridgewater Pure Alpha II - are expected to record significant losses this year as the March stock market crash upended their computer trading models.
Meanwhile, human-run funds logged in some of their best returns in a decade, including Saba, Pershing Square, and Whale Rock.
John Thaler, an equity manager at Hampton Road Capital Management, said, "stock-pickers had several years of self-inflicted under-performance in the past decade, and the narrative was that computers had defeated humans."
"Then, the quants hit an air pocket of tough relative performance, and this year, long-short equity managers outperformed by an enormous amount," Thaler added.
The bigger winners this year, as we noted, are the "13-year-old Robinhooders" who outperformed everyone.