How quant funds beat the market by being 'early, contrarian and right' — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- SG CTA Index returned 15.7% over the nine months to end of Q3, outperforming the S&P 500's 11.7% gain over the same period; the benchmark tracks major strategies including Man Group, PIMCO, AQR and Winton Capital funds
- CTAs correctly anticipated September's sudden bond sell-off with short positions against U.S. Treasurys, adding to earlier gains from bullish dollar positions and pre-Iran war long oil bets placed in January
- Andrew Beer of Dynamic Beta Investments called the sector "early, contrarian and right," noting CTAs positioned for rising rates ahead of global bond turmoil after nailing both the crude oil rally and the bond rout
- Nicolas Gaussel of Metori Capital Management said CTAs' ability to short bonds and short-term rates proved decisive in 2025, while the unusual positive correlation between equities and bonds left traditional 60/40 portfolios with little diversification benefit
- Yung-Shin Kung of Mast Investments warned that risk in many CTA books has grown increasingly concentrated, with year-end performance hinging on how energy prices and interest rates behave
- Beer argued CTAs captured two defining 2025 themes — AI-led equity optimism and panic over oil and inflation — by sidestepping the emotional biases that trip up human managers
Why it matters: For investors running standard 60/40 stock-bond portfolios, the simultaneous decline in both stocks and bonds this year made diversification do almost nothing, while CTAs that could go short bonds captured both sides of the move for a 15.7% return versus the S&P 500's 11.7%. With industry figures warning CTA book risk is growing concentrated, the gap reflects both a structural correlation shift in one year and a single trade thesis working across asset classes.
Ask SkimNews
