So much for the quant revolution…at least for now.
Discretionary hedge funds — those where humans make
the investment decisions — are beating out
quantitative funds, which are computer-driven, for the past
month and year. According to Preqin, discretionary hedge funds
gained 1.06 percent in April, compared with 0.75 percent for
the quant funds. Over the most recent 12-month period, the
humans steered their funds to a 12.43 percent gain, while the
computers only generated 7.09 percent returns. Altogether, the
average hedge fund in its universe was up 0.76 percent in April
and 10.67 percent for the recent 12-month period. It will be
very interesting to see whether this trend persists.
David Tepper’s Appaloosa Management reported
two new positions among its top-ten holdings in the first
quarter. They are banking giant Bank of America and General
Motors, which is a target of an activist campaign by Greenlight
Seth Klarman’s Baupost Group boosted its U.S.
stock portfolio in the first quarter by more than 11 percent,
to about $8.5 billion.
Bridgewater Associates cut back its U.S. stock portfolio,
including positions in emerging markets stocks, in the first
quarter. The macro firm reported $8.8 billion in its U.S.
equity portfolio for the March period, down from $10.5 billion
at year-end. It generally devotes 75 percent or so of these
assets to three exchange traded funds that bet on large
In the first quarter, it reduced its position in its largest
holding, the Vanguard FTSE Emerging Markets ETF, by 21 percent
and in its third-largest holding, iShares MSCI Emerging
Markets, by 43 percent. Its second-largest position is the SPDR
S&P 500 ETF, the size of which remained essentially
unchanged. To put its U.S. stock bet in perspective,
Bridgewater altogether manages about $150 billion.
The HFRI Emerging Markets (Total) Index rose 1.6 percent in
April, boosting its gain for the year to 7.8 percent. It is
also up 13.8 percent in the trailing 12 months, posting gains
in 10 of the 12 months. Performance was led by the India Index,
which gained 5.63 percent in April and is up 22.1 percent for
the year. Altogether there was $205.8 billion invested in
emerging markets hedge funds at the end of the first