During the past five years there has been huge growth in assets managed quantitatively, an approach that uses models built to analyse widely available company data. Not only have the better-known quantitative houses seen growth in their long-only products, but there has been an explosion in hedge funds in this space. Included in this are all the 130/30 type flexible products, which have a long and short portfolio, capable of a 130 per cent positive exposure and 30 per cent negative exposure to the market.

This growth is partly linked to the fact that many of these managers have achieved strong past performance. As a result, the amount of leveraged capital invested in stocks that are similar has become significant.