ONE of the most popular hedge fund trades just hit a wall.
An investment approach that profits from the divergent paths of high and low-momentum stocks over time - a strategy that had one of its biggest gains on record in 2015 - seized up in the last three months, posting the worst quarter in six years. The plunge helped zap returns among a big category of quantitative hedge funds, the so-called market neutral group, whose year-to-date decline of 2.3 per cent is the largest since 2012.
While the tactic may be esoteric, the force that pummelled it is not: a growing revulsion among investors to shares whose main claim to fame in the past few years was that they kept going up. Anyone pursuing the...