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By Benedicte Gravrand, Opalesque London:

The theme of the main battle at ‘The Battle of the Quants III’ in London on Friday was ‘Machine vs. Human Intelligence’ and it featured some of the crème of the quantitative fund management arena (see here), who debated in front of the 200 or so attendees.

Quantitative strategies can be defined as strategies that are entirely automated – apart from the research ahead of the production of the models. Quant funds are funds that select securities based on quantitative analysis, supported by computer-based models built by the managers – who use an investment strategy of their choice. Sometimes the managers will use their own judgement too during the investment process.

A participant pointed out that in a 20-year long study, systematic funds were found to have outperformed fundamentally-based funds. The HFRI Quantitative Directional Index is at 5.17% (est. to end-May) YTD (-22.94% in 2008 and 12.35% in 2007); the HFRI Systematic Diversified Index at -2.08% YTD (18.05% in 2008 and 10.34% in 2007) – compared to the HFRI Fund Weighted Composite Index which is at 9.43% YTD (-19.02% in 2008 and 9.96% in 2007).

Here are some of the facts and ideas that were highlighted:

Humans predict Machines can help with calculations of market timing, but predicting 2008 was a human task: the industry should have forec......................

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