Growth in factor investing renews crowding fears

quant money overcrowding — EMN funds believe a factor-crowding storm can be avoided

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Equity market neutral (EMN) funds are back in vogue. Assets under management in the strategy, which slumped to $29 billion at the end of 2008 from a pre-crisis peak of $57 billion, hit an all-time high of almost $66 billion in April this year, according to Hedge Fund Research.

It may be a good idea to keep the champagne corked, however. Over the past decade, investments in exchange-traded funds (ETFs) that place directional bets on the same equity factors that EMN strategies aim to neutralise

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