Quants in Worst Losses Since October as Crowded Bets Buckle

Quant hedge funds are kicking off the year in the red, as setbacks in crowded US stocks clobbered the strategies, reviving concerns about volatile returns in the sector.

Early January marked the worst 10-day period for systematic long-short equity managers since October, with losses reaching 1%, according to prime brokerage data from Goldman Sachs Group Inc. Most of the pain was concentrated in US equities, Goldman’s Kartik Singhal and Marco Laicini wrote in a note, drawing parallels with the sharp drops that hurt quant portfolios in June and July last year.