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Nearly every European fund run on a quantitative basis underperformed their peer group in 2007, according to figures from Standard & Poor’s Fund Ratings.

The figures showed only two funds – the £132m Invesco Pan European Structured Equity fund and £1.2bnJPM Europe Strategic Growth fund – outperformed their sectors, while the other 17 funds trailed behind.

The funds respectively returned 12.45 per cent and 10.9 per cent over the calendar year, compared with the offshore Equity Europe sector, which includes 391 funds and saw an average return of 9.88 per cent, according to Morningstar.

In relative terms, three European quant funds performed worse in January 2008 than they had done throughout 2007.

These included the two top performers from the previous year, and JPM's £1.45bn Euroland Equity fund.

The figures reflect the lacklustre performance of quant funds in general over the past year or two, S&P said, stressing it may have been simply a case of style, rather than problems with the systems.

Peter Fuller, director of research at S&P Fund Ratings, said: "It is not necessarily that these funds have done a bad job. Many quant funds have a value bias, and value investing has done very well for the past five years, but it underperformed in 2007, compared with momentum and growth investing.

"However, in 2007, fund managers realised that what mattered were solid operations giving growth and liquidity. They wanted safety and were prepared to pay for it. That prompted a switch from value to growth."

He added quant funds had also been hit by exposure to small and medium-cap stocks, which underperformed last year. "Quite a lot of quant funds have exposure there because those with large diversification can afford to have a portion in small companies," she explained.

Mr Fuller said the 19 funds in the list were by and large quant-assisted funds – where quant methods are used only as a basis for investment decisions – rather than those using “black box” systems, where no scope is given for fund managers to use their discretion.

He said: "JPM’s quant-assisted funds had a very disappointing year, although the more actively managed funds – run by John Baker and Jon Inglis and based on the same model – all had very strong returns."