Key Facts
- ✓ The average computer-run equity fund is down 1% through mid-January 2026, according to Goldman Sachs data.
- ✓ Renaissance Technologies' two largest funds each lost approximately 4% through January 9, as reported in HSBC's Hedge Weekly.
- ✓ Schonfeld's quant-only strategy declined 3.9% through January 16, according to a person familiar with the matter.
- ✓ Engineers Gate was down around 6% midway through January, marking one of the steepest declines among major quant managers.
- ✓ The average quant fund returned 7.7% in 2025, underperforming both the average fund and the S&P 500's 2025 gain.
- ✓ Crowded trading positions have been identified as a key factor contributing to the poor performance in early 2026.
Quick Summary
Quantitative hedge funds have stumbled into 2026, with major managers reporting significant losses in the year's opening weeks. The average computer-run equity fund is down 1% through mid-January, according to data from Goldman Sachs.
The poor performance marks a continuation of challenges from 2025, with several high-profile funds experiencing their worst stretch of losses since early October. Market volatility and crowded trading positions have combined to create a difficult environment for algorithmic strategies.
Major Funds Hit Hard
Prominent quantitative managers have not been spared from the early-year turbulence. Renaissance Technologies, one of the industry's most recognized names, saw its two largest funds lose approximately 4% each through January 9, according to HSBC's Hedge Weekly report.
Schonfeld experienced similar difficulties, with its quant-only strategy down 3.9% through January 16. Engineers Gate fared even worse, declining around 6% midway through the month.
The losses extend beyond these specific managers. The average computer-run equity fund was down 1% through January 15, according to Goldman's analysis. This represents the worst performance since early October 2025, when systematic funds faced a "long, slow bleed" during the summer months.
These managers declined to comment on the performance figures.
Market Drivers Behind Losses
The primary driver of these losses has been US stock market volatility. Markets have been particularly choppy since the beginning of the year, largely due to trade proposals floated by President Donald Trump's administration.
Goldman Sachs notes that crowded trading positions have further compounded the problem. When multiple funds crowd into similar trades, it can amplify losses when those positions move against them.
Systematic long-short equities strategies in the United States have faced particular headwinds. Industry insiders indicate that January 16 proved especially difficult for many quant funds, with performance in Goldman Sachs' FICC and Equities and Prime Services sector falling notably short.
The challenges mirror difficulties experienced throughout 2025, when systematic funds endured several extended periods of losses. These included a difficult stretch in June and July, followed by trouble in early October when crowded trades, momentum sell-offs, and inflated junk stocks led to drawdowns.
Performance Context
The current performance represents a worse start than the deep drawdown experienced last summer. While funds managed to rebound from previous losses, the early 2026 environment has proven particularly challenging.
For context, the average quant returned 7.7% in 2025, according to hedge fund research firm PivotalPath. This figure fell below both the average fund and the S&P 500's 2025 gain, highlighting the sector's underperformance relative to broader markets.
The crowding issue has been flagged as a significant concern. PivotalPath noted in a January report that spikes in crowding measures have historically preceded previous drawdowns in systematic trading strategies.
Spikes in crowding measures have preceded previous drawdowns in systematic trading strategies.
This pattern suggests that the current environment may require careful risk management as funds navigate the early weeks of 2026.
Looking Ahead
The early-year performance raises questions about the sustainability of quantitative strategies in the current market environment. With trade policy uncertainty and crowded positions creating headwinds, funds may need to adapt their approaches.
Historical patterns suggest that crowded trades can create self-reinforcing cycles of losses. When multiple funds hold similar positions, selling pressure can trigger cascading losses across the sector.
For investors, the performance data highlights the importance of diversification and understanding the specific strategies employed by quantitative managers. Not all quant funds are created equal, and performance can vary significantly between different approaches and risk profiles.
The coming weeks will be critical in determining whether this represents a temporary setback or the beginning of a more extended period of difficulty for the quantitative hedge fund industry.
