For quantitative hedge funds, the bloom has been off the rose since the financial crisis got underway. Many of these funds tanked in 2008 and have yet to recover. One in four has closed since 2007 according to one estimate. Funds have exited, usually finding their way into human-managed funds.

Symbolically, a huge moment came in October 2009, when James Simons--the so-called King of Quants--announced his retirement, though he continues to serve as non-executive chairman of Renaissance Technologies. A once-high flying quant fund firm, The New York Times notes that after losing 16 percent in 2008 and 5 percent in 2009, assets in the larger of Renaissance's two funds have dropped to about $4 billion from $26 billion in 2007. (That fund is up this year, however.)

While they were once regarded as geniuses, the quants are in search of a new secret sauce. The idea of statistical arbitrage, pairs trading and the like has been discredited to a certain extent. The next big thing in the industry--the next big source of alpha--is as of now unclear.

For now:
- here's the article

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