Computer programs keep buying in a quant's stock market

New York

THAT money you see sloshing around in the US stock market, it belongs to the robots.

At least, that's the picture emerging from a growing divergence between quantitative funds and discretionary managers. Systematic strategies have barely budged from near-record participation in US stocks. Meanwhile, fundamental equity long-short managers can't afford to be anything but picky, considering the market's narrow leadership.

The result: the largest gap on record between humans' and computers' gross exposure to US equities, data compiled by Credit Suisse Group AG show. For now, systematic traders are the dominating force in markets.

"This is the largest footprint for quants. It's a function of allocation and leverage," Mark Connors, global head of risk advisory at Credit Suisse Group, said. "The reason why that's important is that they're not going away. Complexity isn't going to be rolled back." In a sense, the divergence reflects the growing popularity of quant methods over traditional strategies. Nailing down the exact size of the quantitative space is nearly impossible, though some estimates are as high as US$500 billion. What's more certain is that it's getting bigger. Quant is the fastest growing category on both Credi…