Model behaviour.

Automated trading systems do not always perform well. There are three different types of quantitative approaches to investing: trend-following systems, models that identify so-called value effects in shares, and systems that continuously search the markets for arbitrage opportunities. According t...

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Published in:Economist Vol. 394; pp. 71 - 72
Format: Article
Published: Economist Newspaper Limited 1/23/2010
Subjects:
Online Access:View this record in EBSCOhost
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      pub: Economist Newspaper Limited
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        atl: Model behaviour.
      aug:
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        Hedge funds
        Rate of return
        Investments -- Data processing
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          Hedge funds
          Rate of return
          Investments -- Data processing
      ab: Automated trading systems do not always perform well. There are three different types of quantitative approaches to investing: trend-following systems, models that identify so-called value effects in shares, and systems that continuously search the markets for arbitrage opportunities. According to the data provider Eureka-hedge, in 2008, futures funds in which investment decisions are generated by computer models returned an average of 18.2 percent whereas the typical fund of hedge funds declined 19.8 percent. However, managed-futures funds performed badly in 2009, with Man Group, one of the largest hedge-fund groups, reporting that its AHL automated trading system had experienced a disappointing end to the year.
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