How quant funds beat the market by being 'early, contrarian and right'

Hedge fund strategies that rely on complex algorithms and machine learning technology to build trades are beating the stock market this year.Trend-following hedge funds — also known as commodity trading advisors, or managed futures strategies — are computer-based funds that use quantitative programs, statistical models and price signals to crunch huge volumes of data and invest across futures markets.They aim to identify and trade large and consistent trends — both upward and downward — across equities, bonds, commodities, and currencies, to profit from that ongoing momentum. Societe Generale's SG CTA Index — the sector's main performance benchmark, which tracks the daily net returns of major strategies including Man Group, PIMCO, AQR and Winton Capital funds — notched a 15.7% return in the nine months to the end of the third quarter. By comparison, the broad-based S&P 500 rose 11.7% over the same nine-month period.'Early, contrarian and right'Industry pros told CNBC how CTAs correctly called September's sudden bond sell-off with shorts against U.S. Treasurys. That added to earlier gains made from bullish dollar positions, as well as pre-Iran war long oil bets."CTAs are crushin...