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According to the Wall Street Journal (non-paywalled version), hedge funds run by quantitative analysts ("quants"), some of whom are utilizing supercomputers, are now dominating stock trading:
In case you didn't know, The Quants Run Wall Street Now, or so says a headline in today's Wall Street Journal. Quant-run hedge funds now control the largest share (27 percent) of stock trading of any investor type, according to the article. That's up from 2010 when quant-based trading was tied with bank trades for the bottom share. Algorithm-based trading is, of course, the 'sine qua non' of hedge funds and has helped lift them to the top of the investing crowd. [...]
Guggenheim Partners LLC built what it calls a "supercomputing cluster" for $1 million at the Lawrence Berkeley National Laboratory in California to help crunch numbers for Guggenheim's quant investment funds, says Marcos Lopez de Prado, a Guggenheim senior managing director. Electricity for the computers costs another $1 million a year.
(Score: 2) by JoeMerchant on Wednesday May 24 2017, @07:27PM
>how many of these Quant funds have shown an ability to outperform the S&P 500 index, or perhaps the Nasdaq index, over 5 or 10 years?
Of the Quant funds that have been around over 5 or 10 years, nearly all of them. If they could do better by investing on an index strategy, they would. Instead, they invest tens to hundreds of millions in hardware, fiber communication links, and algorithms development and after 10-15 years of playing this game the field is only growing. It not only outperforms the obvious, established, easy strategies - it does so by a wide enough margin to cover the enormous costs they sink into access, processing, and development.
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