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Market chaos helps ago-driven hedge funds post big gains

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Recent market chaos has helped quant hedge funds make big gains with some now on track to rack up record annual returns, according to a report by Financial Advisor.

Kwasi Kwarteng’s mini budget of unfunded tax cuts sparked a dramatic plunge in pound and sharp rise in bond yields last month, providing further trading opportunities for the algo-driven funds, which who are designed to quickly pick up on momentum trades. 

Among the big winners were Aspect Capital’s Diversified Programme, which returned 5.2% taking YTD gains to nearly 44%, according to an investor document, while the Tulip Trend Fund rose more than 58% through September, and the Lynx fund was up in excess of 45%, according to updates on the firm’s respective websites.

Investors have clearly taken note with quant funds seeing net allocations of $7.4 billion up to the and of August. The wider hedge fund industry meanwhile, saw outflows of almost $45 billion over the same period.

The SG Trend Index, which measures returns of some of the largest quant funds in the world run by investment firms such as Winton, Systematica Investments and AQR Capital Management, rose almost 36% through September, putting it on course for its best year ever.

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