- Billionaire Philippe Laffont’s Coatue Management is returning outside capital in the firm’s quant fund to investors, sources tell Business Insider.
- The fund, started roughly a year ago, ran around $350 million, but pulled back its exposure from the markets significantly in March and April.
- A source close to the firm tells Business Insider it plans to continue trading the strategy with internal money, and hopes to eventually reopen it to outside investors again.
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Coatue’s year-long experiment in quant investing is going back to the drawing board.
Billionaire Philippe Laffont’s $350 million quant fund is returning outside capital to investors, sources tell Business Insider. The fund, which began trading outside capital in May of last year, pulled back significantly from the market earlier this year as the coronavirus pandemic sent global markets reeling.
A source close to the firm tells Business Insider that the fund will still be running with internal capital, with the hopes of re-opening the strategy to outside investors again in the future.
Coatue declined to comment on how much internal money the strategy will continue to run.
The Coatue quant fund relies on alternative-data feeds to make its investing decisions, and the pandemic skewed inputs in a way that confused the investing program, Business Insider previously reported.
Even prior to the pandemic, the fund was not producing top-tier returns; the fund lost money in the fourth quarter of last year as equity markets soared.
The fund was led by the firm’s well-respected data science team, and was able to raise significant money for a first-time quant player. Bloomberg reported last year that the team had 30 people, and planned to expand.
The current team headcount, according to a source close to the firm, is more than 25.
The environment for a new quant fund couldn’t have been tougher. With a soaring cost for data and an increasingly competitive quant space squeezing out once-easy gains, the fund then ran into the pandemic, which slammed several long-time quant players like Bridgewater, Point72’s Cubist, Renaissance Technologies, and Schonfeld.
Several quants described it as worse than 2007’s “Quant Quake” that decimated Goldman’s quant investing unit. Credit Suisse shut down the firm’s $519 million QT Fund in late April because of pandemic-related losses.
Fellow Tiger Cub Valinor Management told vendors earlier this week that it is winding down its $2.5 billion operation.
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