Since leverage is the topic du jour: what’s the leverage like at quant shops?
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So much more leverage than Archegos, but pretty tightly hedged to major risk factors (market, country, sector etc) and very diversified so a single name halving or doubling due to idiosyncratic factors would cost you like 1-2% of AUM at most.
Biggest risks are generally a big move in a single quant factor (eg momentum crash) or an unwind of a big quant strategy holding similar names (like what happened in Aug 2007). Equity market neutral strategies rarely blow up but they can bleed.
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