Mutual funds in which the manager selects stocks based upon behavioral finance tenets.
Donnie firmly believes that, when investors are experiencing euphoria, they will bid up stock prices, while the opposite is true when they are feeling angst. To capitalize on this theory, he started a Twitter-based behavioral fund whereby he buys/sells stocks based on the general tone of 500 accounts he follows. Donnie's fund, like most behavioral funds, is underperforming the market, but that's way better than, say, trying to govern an entire nation using similar tactics.
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Finance: What is a quant fund?0 Views
Finance a la shmoop. What is a quant fund?
Oooo, algorithms.... Say it with me people algorithm, math, black boxes, spooky [Equations flying around]
numbers a quant fund is an investment fund
well usually hedged or with elements of hedging that relies solely on the math [Definition of a quant fund]
of everything. They don't care much that toothpaste is now being used for crow's [Man putting toothpaste of his face]
feet abatement and that there's a five-year bullish trend for Colgate they
don't care that Tesla is dominating the world with electric cars and that [Tesla logos popping up all over the world]
gasoline will likely be obsolete in a few decades and they don't care that
people are living longer so life insurance companies have a tailwind [Life insurance sail boat going fast]
behind them too because insurees will be paying those premiums 17 more months
on average in the future before they croak. Well all quant funds care about is [People handing over money before they disappear]
the math of the math, typically a quant fund builds its own proprietary complex
math laden models which automatically trigger a series of trades at any given [Equations flying around]
moment in the trading day hoping to benefit even in tiny ways from what are
essentially arbitrage opportunities or theoretically riskless trades that can [Definition of arbitrage]
be made taking advantage of mixed pricing in the market all around the
world. Quant funds as they are now classified as an alternative investment
in the same vein as hedge funds charge the same exorbitant fee structure and [High fee structure label on quant funds]
because they do such vast volumes of trading that is something like one-third [Stocks being moved around]
of all u.s. stock trades now derive from quant fund managers well they give out
massive commissions and have equally massive sway with the brokerage
community to you know say nice things about them and encourage people to talk [Newspaper article about quant funds]
about how great quant funds are yeah and you've probably seen myriad ads on TV [Woman watching TV]
for their funds you know like this one math it does a body good.. [Dwayne Johnson on the advert]
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