Hedge Fund Quant Manoj Narang Losing 8% Highlights Industry Woes

Discussion in 'Wall St. News' started by truetype, Jan 30, 2018.

  1. truetype

    truetype

    Hedge Fund Quant Manoj Narang Losing 8% Highlights Industry Woes

    2018-01-24 12:00:00.10 GMT By Vincent Bielski

    (Bloomberg) -- It was a tough first year for quant Manoj Narang after a splashy launch.

    Narang’s Mana Partners started trading in January 2017 after raising about $930 million in commitments, partly from JPMorgan Chase & Co.’s alternative-asset management clients.

    Mana’s sheen has since faded: the hedge fund lost 8 percent last year after fees and parted ways with Chief Investment Officer Yuriy Nevmyvaka in December, according to people familiar with the firm.

    Mana’s rough start underscores the trouble in quantland.

    Algorithm-driven hedge funds rushed into statistical arbitrage and big-data strategies in the past two years as market volatility almost vanished, undercutting their wagers. In this increasingly crowded industry, startups like Mana also need strategies to distinguish themselves from powerhouse firms like Citadel and Two Sigma.

    “This has become such a more competitive business that the days of starting off with a small, simple strategy by yourself and being able to bootstrap that into something bigger, that’s really hard now,” said Adrian Sisser, co-founder of quant firm Seven Eight Capital, which started five years ago in partnership with Steven Schonfeld’s family office that supplied capital.

    “You need a sophisticated risk model and they’re not cheap.”

    Mana isn’t the only quant fund to struggle. Two Sigma’s Compass Cayman Fund was down 4.4 percent through in 2017 through November, according to an investor document. Quant funds on average underperformed the industry, returning 4.8 percent last year, according to Hedge Fund Research. That’s a far cry from the almost 20 percent gain of the S&P 500 Index...
     
  2. Nothing to see here. Field got crowded as fuk, SEC started to look at illegal techniques, other market participants got wise to the hft scams. 99% of the profit was from scams they ran, not real alpha

    thus, big mouth narang lost his shirt

    i knew he was done when he appeared on one of the scammy trader chat podcasts. only con men looking for suckers appear there
     
    SimpleMeLike likes this.
  3. Another convincing evidence why most investors should stick to passive investing in S&P500. No efforts needed, no brains needed. Why pay so much to hedge fund investors who underperform cheap indices? The world will be better off if those ultra-smart hedge fund mathematicians and scientists go work as mathematicians and scientists instead of working as expensive underperforming fund managers.
     
  4. Craig66

    Craig66

    I wondered what was going on there as well, never a good sign.
     
    jys78 and SoesWasBetter like this.
  5. Not necessarily so. Jack Schwager appeared on that podcast too. I think many elitetraders here read his Market Wizard books. He certainly is not a con-man.
     
    d08 likes this.
  6. well, should have said, con man or selling something .

    dudes running a billion dollars normally dont appear on shows like that without a reason
     
    helpme_please and SimpleMeLike like this.
  7. d08

    d08

    Many smarter investors go with quants for diversification because when eventually the volatility bump comes along, you don't want to be passively long in many assets are correlations increase (as they tend to do during downturns). Reducing correlation matters.
     
    Van_der_Voort_4 likes this.
  8. learner88

    learner88

    Sounds reasonable. This reason seems to work on many rich investors.

    How I wish I can use the excuse on my employer. "Boss, I underperformed this year. But next year, I may outperform. You never know, so continue hiring me at top dollars. You'll regret if you sack me. In the mean time, I have a track record of underperforming for the past 10 years. Nevertheless, you will regret if you sack me. I may outperform just when you need me to. As to when, I don't know."

    Sounds like fund manager is the best career in the world. Continue to be paid top dollars despite underperforming over a 10-year period when cheap passive monkeys can do far better.
     
  9. I don't think losing 8% is outperformance but speaking more generally these comparisons are flawed.

    A market neutral quant fund's benchmark might be something like a short term interest rate. Other quant type trend following strategies might compare against CTA index benchmarks or other constructed indices.

    Outside of long only 'quantamental' type or active indexing funds I wouldn't expect many quant strategies to benchmark against the SP.
     
    #10     Jan 31, 2018