macrocephalopod

And downtime costs

Great point. I’d also argue that most institutional hedge fund LPs are compulsive to gather non-correlated strategies managers (quants) until the jackpot hits. Then they leave. To some extent, all top quant managers experience this after their outlier year of huge + returns.

Strategies work until they don’t, until it gets arbed out, until the strategy gets flooded with capital, etc. But the best quant managers will find the next big opps - always. Never ever redeem from a top quant fund. You’ll never get back in again & you’ll regret it.

Unless of course top quant funds have issues of their own. And I'm not sure about "always" :) but yes, gathering uncorrelated strategies makes sense, as well as assuming a short longevity for the working ones

1 trick ponies are self evident. They present that way, they present as narrow specialists & there’s no mystery for the LPs that they’re done when the strategy sunsets, e.g. merger arb in late 90s, convert arb in early 2000s. I consider elite vol generalists to be evergreen.

I agree with this except I would say “big multi strats” instead of “big quant funds”. If you are doing equity l/s, fixed income rv, vol arb, convert arb etc as well as quant you have a much more diversified revenue stream and better opportunities to pivot when one stops working.

Where are people drawing the line on what is and isn't a "quant fund" these days?