Great, great Bloomberg piece out describing how Barclay’s Global Investors (BGI) has used Ph.D.s and technology to reshape the hedge fund business.
BGI is one of the most powerful forces in money management today. It’s a den of finance Ph.D.s, mathematicians and other disciples of quantitative analysis, or quants. BGI quants design investing strategies for thousands of stocks, bonds and currencies and then use computers to pick which ones to buy and sell.
BGI manages almost $1.7 trillion in assets and has a finger in 65 of the world’s 100 largest pension plans. Its iShares exchange-traded funds, which are low-cost index trackers that can be traded like stocks, have made the firm the Wal-Mart of the $383 billion ETF world. Lately, BGI’s size and reach have helped fan speculation that its parent, London-based Barclays Plc, is headed for a megamerger with a big U.S. bank. Barclays is the third-largest U.K. bank by assets.
Blake Grossman, the Stanford University-educated economist who runs BGI, has used his quants to quietly transform a firm built on index investing into one of the world’s largest hedge fund managers.
Read the whole thing. Really.