Misplaced Anxiety? A Reassessment of Crowding in Systematic Investing

Acadian

Research

11 Pages

Acadian Asset Management revisits quant crowding and concludes current anxiety is mostly overstated. The paper says today looks very different from 2007, with muted factor performance, limited signs of positioning stress, and systematic investors often leaning against retail driven growth speculation.

Key Takeaways

2007 Comparison Fails: In 2006, the U.S. value factor reached a rolling 3 year Sharpe ratio near 2.5, while recent factor performance has struggled to beat the market.
Short Crowding Looks Limited: For U.S. stocks from Jan 2007 to Dec 2025, short utilization in the most disfavored systematic decile was no higher than much of the post GFC era.
Overlap Is Not Fatal: Acadian notes proprietary valuation signals still suffered a brief drawdown in August 2007, yet showed strong long term payoffs, implying some crowding risk can be manageable.
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