High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our T&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. https://www.ft.com/content/fdfd5e78-0283-11e7-aa5b-6bb07f5c8e12 Nearly 10 years after its nadir, quantitative investing is again the hot trend in finance Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) 23 Print this page 7 hours ago by: Robin Wigglesworth It was a typical New York summer day, the kind where arriving at Goldman Sachs’ perfectly air-conditioned offices in downtown Manhattan was a blissful release from the humid weather outside. But for Gary Chropuvka it proved to be one of the worst days of his life. Sample the FT’s top stories for a week You select the topic, we deliver the news. Select topic Enter email address Invalid email By signing up you confirm that you have read and agree to the terms and conditions, cookie policy and privacy policy. Mr Chropuvka worked at Goldman’s money management arm, specifically at Quantitative Investment Strategies, a division staffed by mathematicians, computer scientists and physicists. Even at Goldman, the QIS employees were considered intellectual superstars. Their prowess at decoding the signals of financial markets meant the unit managed $165bn at its peak — more than any hedge fund group. But on August 6 2007, everything unravelled. As soon as US markets started trading, the previously wildly successful automated investment algorithms coded by the QIS brainiacs went horribly awry, and losses mounted at a frightening pace. What became known as the “quant quake” subsided in a week and was largely contained within the computer-powered investment industry. It was soon overshadowed by the global financial crisis. But it scarred a generation of financial scientists on Wall Street. Even Renaissance Technologies, the legendary hedge fund co-founded by cold war codebreaker James Simons, suffered painful losses, and it nearly obliterated Goldman’s QIS. “All this worked academically, and for a long time it worked in practice, and then all of a sudden you have this horrible event,” Mr Chropuvka says. “It was the most humbling experience of our lives.” Nearly a decade later, quantitative investing is once again the hottest trend in finance. Computer-driven hedge funds have just notched up their eighth straight year of client inflows, doubling their assets from 2009 to $918bn, according to Hedge Fund Research. Even this understates the interest, as many traditional hedge funds and big mutual fund managers are all trying to blend more quantitative techniques with their traditional approaches. https://www.ft.com/content/fdfd5e78-0283-11e7-aa5b-6bb07f5c8e12