As machine learning techniques and quantitative trading systems continue their relentless creep into all corners of asset management, it seems the old view of systematic managers – all boffins and black boxes, decidedly out of step with the boisterous, buccaneering spirit of the rest of their hedge fund peers – has been firmly laid to rest.

This step-change is perhaps most visible among macro-focused strategies. Two of the six shortlisted funds at the EuroHedge Awards this past January were systematic names: the Aspect Systematic Global Macro Programme, which generated a striking double-digit return in what was a hellish 12 months for markets, and ADG Systematic Macro, which continued its strong run, having never suffered a down year.

And with Aspect ultimately triumphing in the category, it’s evident that the macro sector is no longer dominated to the same extent by the well-established discretionary managers of old, such as Brevan Howard and Moore Capital.

Recent developments only reinforce a sense of a gathering momentum in favour of computer-based trading among traditional hedge fund firms.

At a recent event in New York, Sandy Rattray, Man Group’s CIO, warned of the dangers of complacency among money managers who continue to eschew algorithms in favour of a purely human approach to investing. Rattray – whose firm is a long-standing user of quant models, employing them in more than half its funds – observed how large amounts of data can help managers better manage money and run
positions in a range of ways.

Meanwhile, over in Mayfair, Paul Brewer’s decision to close down his long-running Rubicon Global Fund – a discretionary, top-down fundamental strategy with a near 20-year track record – and focus on its younger long-only systematic offering, Rubicon Dynamic, offers further hints as to the general direction of travel.

Yet, as ever in this most diverse and kaleidoscopic of industries, it’s not all one-way traffic. Other views are available.

Alan Howard, the global macro mainstay who co-founded one of
Europe’s longest-running brand name hedge fund firms in Brevan Howard, is unwavering in his preference for brains over bytes when it comes to building positions and generating returns.

“Trading success is ultimately still a function of individual trader skill,” the discretionary veteran forthrightly told EuroHedge recently.

In this month’s profile (see pages 18-20), the team behind Aspect’s Systematic Global Macro Programme discuss how their system has expanded beyond trading on traditional macro indicators such as currencies and interest rates, adding a growing range of alternative data to their investment arsenal in their quest for alpha.

Still, as quantitative macro managers’ datasets evolve, unearthing ever more complex and increasingly esoteric datasets, that initial research stage of gauging the quality of data and how it will add value to a portfolio still very much hinges on human inquiry. There are face-to-face meetings with potential data providers to be arranged, questions asked about how vendors’ collect and collate their information sets, probing deeper into a clients’ history, processes and coverage, and filtering out the useful from the useless.

Whatever your perspective on this humans-versus-tech turf war, time – and returns – will ultimately tell where this trend ends up. But, if nothing else, the rise of systematic macro strategies provides further proof once again of this industry’s restlessly innovative nature, and continued ability to reinvent the ways in which to make money. Which, at the end of the day, is the whole point of this business.

The rise and rise of systematic macro on EuroHedge.