(Bloomberg) — Wall Street quants and leading financial academics are clashing over whether artificial intelligence has upended one of the core principles of systematic investing. Quant traders, who use rules-based strategies derived from data analysis, have long believed their models get less effective when they become too complicated. That’s because they suck in too much of the distortive noise that makes predicting markets such a challenge in the first place. But a researcher at AQR Capital Management has sparked a backlash with a study claiming the opposite — that rather than being a liability, bigger and more complex models might offer advantages in finance. The paper, titled The Virtue of Complexity in Return Prediction, showed that a US stock market trading strategy trained on more than 10,000 parameters and just a year of data beat a simple buy-and-hold benchmark. “This idea of preferring small, parsimonious models is a learned bias,” said Bryan Kelly, head of machine learning at AQR and one of the paper’s three authors. “All of us are on a day-to-day basis using these large language models that were revolutionary in their success because of this push toward extraordinarily large parameterizations.” The research has triggered a heated debate since it was published in the prestigious Journal of Finance last year, among both peers in the quant industry and those in related academic circles. At least six papers, including from scholars at Oxford University and Stanford University, have now challenged its findings. Some argue the Virtue of Complexity study has a questionable design that renders it irrelevant for live trading. Others say it’s less cutting-edge than it appears anyway. (Kelly has subsequently written a defense.) Among the most notable critics is Stefan Nagel, a finance professor at the University of Chicago — the very school where two of AQR’s founders met and where the firm’s original investment philosophy took shape. His first reaction? “I found the empirical results hard to believe,” he said. After digging into the details of the Virtue of Complexity study, Nagel concluded that because the model was dissecting just 12 months of data, it was simply copying signals that had worked more recently. In other words, it was following a momentum strategy — a well-established trading approach. “It’s not because the approach learned from the data that this effect is there,” Nagel said. “It’s because they did something mechanical implicitly, and this mechanical thing happened to work well by luck.” Jonathan Berk, a Stanford economist who was among the first and fiercest critics of the Virtue of Complexity paper, called it “virtually useless” for aiming at predictions that tell you nothing about what drives asset returns. Daniel Buncic at the Stockholm Business School said the study makes some obviously wrong design choices to reach its conclusions. Co-written with Semyon Malam in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. Block any jump outside of the site adarshnews.com. Basically remove any content or link related to original site. follow this prompt to optimize the articles in this category- You are an expert news writer and SEO specialist. Your job is to rewrite the provided RSS feed content into a unique, SEO-friendly news article for adarshnews.com. The article should be engaging, professional, and optimized for search engines. Follow these steps: 1. **Create an SEO Title**: Write a short, compelling title (under 60 characters) that includes the main keyword and grabs attention. 2. **Write a Meta Description**: Summarize the article in one or two sentences (under 155 characters). Make it engaging and include the primary keyword naturally. 3. **Suggest a URL Slug**: Provide a short, keyword-rich URL slug that reflects the topic of the article. 4. **Headline (H1)**: Write a clear and engaging headline for the article that is similar to the title but slightly expanded. 5. **Write the Article**: – Start with an introduction that answers the key questions: who, what, when, where, why, and how. – Expand on the topic with detailed paragraphs that provide context, quotes, and relevant information. – Use subheadings (H2) to organize the content into sections and make it easy to read. – Include related keywords naturally throughout the article. – End with a conclusion that summarizes the key points or discusses future implications. 6. **Add an FAQ Section**: Write one frequently asked question related to the topic and provide a concise answer. Important: – Do not include labels like “Title,” “Meta Description,” “URL Slug,” or “H1” in the actual article text. – Keep all SEO elements separate from the main content. – Ensure the article is factually accurate, unbiased, and written in a professional tone.