In a market that is increasingly dominated by robots, indexing, and algorithms, humans are beginning to play to their own strengths. The predictability of computers and passive funds has created a possible opening for some investors. Bloomberg’s Justina Lee and Yakob Peterseil report:
Some 60% of assets in U.S. equities are housed in passive products, while quant strategies comprise another 20%, according to JPMorgan Chase & Co. All told, index and exchange-traded funds, quants and options-related strategies dominate all but 10% of U.S. stock trading, the bank calculates.
“What it may do is create a relatively predictable pattern of systematic buying or selling that could create some pressure in the market,” said Shane Edwards, global head of equity derivatives at UBS.
The thinking goes that leveraged ETFs, market-makers and quants amplify morning moves in the afternoon session, making it easier to divine the direction for a given day once the cash market kicks off.
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Jeremy Jones, CFA
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