As hedge fund manager Buford Scott sat at home, watching the TV in shock as it emerged Britain had voted to leave the European Union, his computer-based trading models were quietly boosting his business by 1.5%.
Reuters reports that Scott's algorithm-driven fund, and others like it, beat hedge funds run by humans on Brexit night, not because the computers had correctly predicted the results of the June 23 referendum, but because they followed trends already in place.
Computer-driven funds placed bets on safe-haven assets like the yen and gold, which had performed well in the six months leading up to the vote, against riskier currencies like the Mexican peso - a play yielding a more than 7% return on June 24.
Hedge funds on average were down 0.18% on the day of June 24, while trend-following machine-based strategies gained 0.71%, according to data from industry tracker Hedge Fund Research (HFR).
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