Quant Funds Making a Comeback
https://www.ft.com/content/2e28fb42-de8a-40d7-8716-88cb5febe006
i think we are starting a decade where quant funds will rule due to central banks doing QT rather than QE like 2010's.
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the one thing i'm a bit confused on is the article keeps mentioning "trend-following" by these quant funds. I understand during times of volatility, spreads will get bigger but what do they mean by the trend following? Are they talking about mean reversion strat or something?
H
Trend-following =
Buying rising assets and shorting falling assets
-> u follow the trend
Mean reverting is almost the opposite: if an asset has over/under perform strongly, it may have deviate from its "mean" (various ways of defining it). So u short it if it has overperformed, hoping for a return to its mean (which is under the current market price). U buy it if it has underperformed and therefore trades under its "mean"/fair value
In the mean reverting family y also have pairs trading: u define a pair of 2 assets that are supposed to move together. If there is a divergence in their performance, u buy the underperforming one and short the overperforming one, hoping the spread will converge back to 0.
Yes but the use of « trend follower » in this article still make no sense.
It’s like they thought Quant HF = Trend Follower HF
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