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Alternative Market Briefing

Quest Partners focuses on skew to avoid the CTA drawdown

Wednesday, April 20, 2016

Bailey McCann, Opalesque New York:

New York-based Quest Partners has been one of the few CTAs in the market to consistently perform well despite a years long drawdown for CTA funds. The firm's flagship CTA strategy has had an annualized return of 13.5 percent over the past 16 years. Nigol Koulajian, founder and CEO of Quest Partners recently sat down with Opalesque TV to discuss how he has been able to maintain a track record like this.

Koulajian first got interested in system design all on his own and wanted to start a CTA based on his ideas early in his career. But he ended up waiting until 1999 to launch Quest Partners after several years managing a fund of funds. The strategy Koulajian developed for Quest caught the eye of Man Global Strategies shortly after launch and from 2003 to 2010 much of Quest's capacity was taken up by running a large mandate from the firm. When Man redeemed in 2010, the firm reopened to outside capital.

According to Koulajian, Quest's rate of performance has to do with maintaining a disciplined strategy that trades in shorter intervals than most other CTAs and focuses on finding alpha that is less transient than simply chasing factors as they become popular.

"We have identified 7 style drifts within CTA indices that can significantly impact performance," he explains. "All of these style drifts have a negative convexity and result in negative returns during equity corrections." This kind of performanc......................

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