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Digital Subscriptions > The Hedge Fund Journal > Issue 112 - March | April 2016 > Systematica Surpasses Ten Billion

Systematica Surpasses Ten Billion

AMG Stake, BlueMatrix success, justify spin-out decision

CTAs in early 2016 have naturally captured the limelight by virtue of delivering their signature diversification benefits, and making money whilst most other hedge fund strategies, and equities, retreated.

But institutional investors, which often have time horizons measured in decades (or theoretically infinite visions for endowments and foundations) do not predicate their multi-billion allocations upon a few months of performance. Much longer lookbacks explain why systematic and quantitative investment strategies now occupy the centre stage of investor attention.

Deutsche Bank’s 14th Alternative Investor Survey, released in 2016, gathers data from over 500 allocators controlling $2 trillion. Over two thirds of these fiduciaries invest in systematic strategies on behalf of millions of pension scheme members, insurance policyholders, and university students. The survey highlights that “the largest investment consultants and pension funds plan to add to one or more systematic strategies, including quantitative equity market neutral, CTA, quantitative macro, quantitative equity and quantitative multi-strategy.”

One of these categories, CTAs, now manages assets of $327.3 billlion in Q4 15, representing more than 10% of hedge fund industry assets of $2.79bn, according to Barclayhedge. CTAs have been particularly adept at satisfying investor appetite for ‘liquid alternatives’, as the liquid nature of the strategies makes them a good fit for many regulated fund wrappers.

CTAs and quantitative strategies are constantly evolving. Many have branched out well beyond traditional trend following strategies, as reviewed by Societe Generale Prime Services in their 2015 market comment paper entitled ‘The Life Outside of Trend’. Investors should not equate quant exclusively with CTAs, as a variety of other partly or wholly quantitative strategies also run many billions. The rigorous analytical techniques that CTAs have honed and refined, over four decades, are increasingly being applied to wider investment universes, including over the counter (OTC) markets and single securities. In an ultra-competitive arena, the latest advances in artificial intelligence, ‘big data’ and technology are being harnessed by the systematic investment community.

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