Quantitative hedge funds start 2011 with strong returns

European quantitative market neutral funds made good progress in 2010 with more managers posting solid, double-digit returns than at any point since 2007. But such is the lot of quant funds that a crisis always seems to be around the corner.

As if on cue the performance of a number of common quant factors reversed sharply in mid-January, threatening to derail managers positioned to capture prevailing factor trends.

European growth, quality and momentum factor returns, which had outperformed in the