Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Computer-led equity hedge funds beat human stock-pickers in October

Published 11/01/2023, 03:46 PM
Updated 11/01/2023, 03:53 PM
© Reuters. FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri/File Photo
GS
-
MIWO00000PUS
-

By Carolina Mandl

NEW YORK (Reuters) - Hedge funds that trade equities using computer programmes defeated human stock-pickers in October by a large difference in performance, according to a Goldman Sachs note.

Systematic long/short hedge funds, as the computer-led strategy is known, posted 4.97% in gains last month, while fundamental long/short went down 0.66%, the bank's prime services team wrote.

The systematic funds' performance was driven by asset selection, volatility and some crowned trades. In the case of the fundamental long/short funds, the detractor was their exposure to stock indexes. In October, the MSCI index of world stocks dropped 2.90%.

In the year through October, systematic long/short gained 15.06%, outpacing the 3.14% in profits that fundamental long/short posted.

As one of the world's biggest prime brokers for hedge funds, Goldman Sachs tracks its clients to show some trends in the industry.

© Reuters. FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri/File Photo

The bank said that overall, hedge funds across different strategies more sold stocks in October than bought, a trend already seen in the two previous months.

Last month, hedge funds also placed bets that stocks in energy, financials, consumer discretionary and information technology will fall.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.