Financial Times FT.com

Hedge funds braced for more pain

By Anuj Gangahar in New York and Kate Burgess in London

Published: August 12 2007 18:30 | Last updated: August 12 2007 18:30

The much-heralded financial rocket scientists responsible for the explosion in complex mathematical trading strategies are bracing themselves for fresh pain after what one team of analysts called “the perfect storm” last week.

Quantitative strategists, or “quants” as they are known, attempt to profit from pricing inefficiencies identified through mathematical models. These send buy and sell signals on small variations in price between different securities.

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