Quant-driven hedge funds tend to move in a pack. That's a sad reality that was underscored by the awesome events of 2008. The differences among many quant funds are pretty subtle in some areas, which suggest a lack of opportunity for above-average gains.

Goldman Sachs' (GS) head of quantitative resources says, "What we're going to have to do to be successful is to be more dynamic and more opportunistic and focus especially on more proprietary forecasting signals...and exploit shorter-term opportunistic and event-driven types of phenomenon." But how possible is this? Goldman Sachs is certainly trying. "We're putting together data that's not machine-readable, finding databases that haven't been explored nearly as well as others, identifying linkages across companies and industries and finding patterns in the data that are not as well known." But there may be limits to what algos can do when the market gets really crowded with them. 

For more:
- here' the article

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