From CNBC: Goldman Sachs is shuttering the hedge fund that was once one of its crown jewels. The hedge fund , called Global Alpha, was once one of the biggest and best performing hedge funds in the world. At its height, it managed as much as $12 billion. The fund now has just $1.6 billion in assets. Goldman expects to return between 85 and ninety percent of the funds assets to investors by the end of October, according to an investor in the fund.
Global Alpha was one of the world’s premier quant funds, using complex algorithms to detect trading opportunities. It was founded in 1997 by Cliff Asness, a former University of Chicago academic who developed the statistical models that drove the trading. Asness brought two other former University of Chicago students, Mark Carhart and Raymond Iwanowski, over to Goldman. Asness left Goldman in part because the firm refused to pay him the way other hedge fund managers get paid—based on the performance of the fund. At the time, members of Goldman Sachs Asset Management, where Global Alpha was housed, were paid based on discretionary bonuses, just like their investment banking brethren.
After Asness’s departure, the firm agreed to start paying the GSAM team based on performance. Carhart and Iwanowski remained at Goldman and oversaw Global Alpha during its best years. It was described by people in the industry as “the Cadillac of hedge funds.” But its most serious losses hit in the summer of 2007, when a so-called “quant bloodbath” erupted….
Read more at http://www.cnbc.com/id/44549144
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