Managed Futures
The Most Powerful Artificial Artificial Intelligence Know Nothing About Investing. That's Perfectly Okay. - February 17, 2021
February 2021 - Managed Futures
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There’s no denying that 2020 was an exceptionally trying year. Few know this as well as active managers, who continued to struggle to provide the promised returns — perhaps none more than celebrated quantitative investment managers like Renaissance Technologies and Two Sigma.
Clients have expressed growing disappointment with quants, as manifested in their steadily increasing redemptions.
Quant managers certainly recognize the peril they face. Some, like Ted Aronson of AJO Partners, have confessed that their investment models no longer work and have given up the ghost. In an interview with MarketWatch, Aronson pulled no punches for his decision to shutter his firm: “Our return sucks over the past few years,” he said. “Our shit is so bad it’s unbelievable compared to our peers.”
Others, perhaps lacking the stomach for such honest self-assessment, have chosen instead to selectively close only their woefully underperforming actively managed strategies (AQR Capital Management) or to remedy their ills by “tweaking” their current models (Bridgewater Associates). Both tactics offer the illusion of change but are more likely stalling tactics built on the hope that either client inertia or luck will allow them to extend their businesses.
However, a genuine remedy for their current and, most certainly, future ills exists: artificial intelligence.
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