We knew this day was coming. The quant-based hedge funds are gaining ground with investors. Now a new survey out by DeutscheBank is showing that half of the most in demand hedge fund strategies are now computer-based. We find this all fascinating and disturbing as well. Quants fundamentally have a lack of transparency, yet we know that with the advances in AI and machine learning, the technology is improving and the trading decisions are made with no emotion. That is, once the human (who has emotions) inputs the algorithm. Anyway, just like many other facets of life, the robots are taking over more of the institutional trading desks, and investor assets.
“Investor interest in computer trading hedge funds is on the rise, according to a survey by Deutsche Bank.
Five out of the top ten most in-demand hedge fund strategies this year use computers rather than humans to make trading decisions, according to the bank’s 15th annual Alternative Investment Survey.
Deutsche’s hedge-funds capital group, which puts investors in touch with hedge funds, surveyed 460 investors looking after $1.9 trillion invested with hedge funds for this year’s survey. The bank said: “Encouragingly, survey results point to another year of growth for the hedge fund industry.”
It also found that nearly four fifths of them said that they now invest in computer trading hedge funds, also known as quantitative or systematic strategies, up from 70% in 2016.
And 58% of respondents said that they plan to add at least one computer trading strategy over the next year, the report found.
These funds can make a vast range of investments, trading faster and more frequently than humans can do in more markets, so offering investors much-desired diversification.
There has been a big growth in the range of computer trading hedge strategies in recent years…”
Read Full Article at Financial News London