Latest news with #AQRCapitalManagement
New York Post
6 days ago
- Business
- New York Post
Rage against the machines: Hedge fund titan Cliff Asness ‘surrenders' to AI
Hot-tempered hedge fund titan Cliff Asness, who is worth a cool $2 billion according to Forbes, has admitted his AQR Capital Management has 'surrendered to the machines' and fully embraced AI to make trading decisions. The 58-year-old New York-born money man, who also has admitted smashing his own computer screens in anger in the past, told the Financial Times his Connecticut-based firm is now using machine-based algorithms powered by artificial intelligence to make its bets. 'When you turn yourself over to the machine you obviously let data speak more,' Asness, whose firm has $136 billion worth of assets under management, was quoted by the British financial newspaper as saying. Advertisement Cliff Asness told the FT that his AQR Capital Management firm has now fully embraced AI in its investment strategies. Getty Images 'It's been easier that this has been a very good period for us after a very bad period. Odds are it will be a little harder to explain (to investors) in a bad period, but we think it's clearly worth it. The move marks a shift in position for Asness, who had expressed skepticism in an interview with the same newspaper nearly eight years ago, saying that his firm was not ready to stand behind big data and machine learning. 'We worry a lot about finding spurious patterns by data mining. In big data combined with machine learning this is even more dangerous because the data sets are so big and machine learning is so good at finding patterns,' Asness said in December 2017. Advertisement So-called quantitative hedge funds use supercomputers to analyze and filter reams of data and then process that information to make their investing decisions. The FT reported that AQR has recently expanded its use of AI and machine-based investing beyond stocks, despite first bringing the technology onboard in 2018. While the last time Asness's firm saw mass layoffs was in January 2020 after a poor year led to 10% of its global headcount getting the axe, Wall Street is expecting artificial intelligence to reshape the US financial industry over the next few years. Advertisement A January report by Bloomberg Intelligence predicted that up to 200,000 jobs could be cut within five years thanks to the cutting-edge technology that can perform tasks in the way humans do. The study said major global banks would use AI to 'streamline their operations', with back and middle office roles that perform routine items such as data entry and customer service are the most under threat. It also warned that the technology could be used to take on responsibilities typically assigned to entry-level junior bankers, such as drafting financial models and analyzing data for megabucks M&A deals. On Tuesday, the Wall Street Journal reported how Morgan Stanley had used AI to take on the translation of old, outdated coding languages, saving developers an estimated 280,000 hours of working time. Advertisement 200,000 jobs could be gone across Wall Street within five years thanks to AI, a Bloomberg Intelligence study forecasted. Pichapob – That drive for efficiency is fueled by profit potential. The Bloomberg Intelligence report projects AI could boost bank pre-tax profits by 12% to 17% by 2027, adding up to $180 billion to the industry's bottom line. But Ray Dalio, the founder of the world's largest hedge fund Bridgewater Associates, has warned markets not to buy all the hype surrounding artificial intelligence. In an interview with the All-In podcast earlier this year, the 75-year-old, who has invested in AI himself, warned some investors are ignoring basic economic fundamentals, likening it the tech giant crash of the late 1990s. 'This looks quite a lot like 1998 or '99,' Dalio said, referencing the peak of the dot-com era. 'A great company that gets expensive is much worse than a bad company that's really cheap.'
Bloomberg
03-06-2025
- Business
- Bloomberg
AQR's Cliff Asness Hails Return of ‘Basic Rational Investing'
Years of speculative excess are giving way to healthier markets where fundamentals now matter, boosting quant stock-picking strategies across the board, according to AQR Capital Management 's Cliff Asness. While tariff-induced volatility has whipsawed the S&P 500 Index and hedge funds alike, it's been a boon for quant approaches that go long and short across hundreds of stocks. Among the winners, the AQR Equity Market Neutral Fund has returned roughly 15% this year, data compiled by Bloomberg show.
Bloomberg
03-06-2025
- Business
- Bloomberg
Asness on Buying Opportunities, Markets, Tarirffs
Cliff Asness, AQR Capital Management founder, talks about the current state of markets, his investing philosophy, where he sees buying opportunities and how President Donald Trump's policies could impact investors. He is on "Bloomberg Open Interest." (Source: Bloomberg)
Yahoo
13-05-2025
- Business
- Yahoo
Using tax-aware long-short vehicles to track down alpha
Financial advisors and clients seeking to boost the tax savings available through loss harvesting may consider an increasingly popular leveraging strategy known as the "long-short" method. The combination of "long" investments on a stock's positive outlook with "short" ones based on equity declines, plus margin loans that add debt leverage to the vehicle, may turn off some advisors with risk-averse clients who don't have a lot of capital gains that need offsetting. But tax-aware long-short investing is drawing clients seeking to maximize returns through active management on a lengthy timeline with lower payments to Uncle Sam. At their root, tax-aware long-short vehicles present "an opportunity to go overweight certain factors and go underweight certain factors and find alpha between the two," said Brent Sullivan, a consultant on taxable investing product distribution to sub-advisory and ETF firms who writes the Tax Alpha Insider blog. The accompanying tax savings stem from loss harvesting that "oftentimes will exceed a dollar contributed" or could even reach 200% to 400% of the principal, he noted. Continual rebalancing pushes up the losses past the level available from many direct indexing strategies in a process Sullivan compares to a "perpetual ball machine." "The loss harvesting paradigm here is just totally different than a direct indexing long-only," Sullivan said. "As the market goes up, you can continue shorting. Those shorts generate harvestable losses." READ MORE: How the ticking clock affects tax-loss harvesting Much like his research documenting the continual rise in Section 351 conversions to ETFs, Sullivan is keeping close watch on tax-aware long-short vehicles, which have already surpassed his prediction of attracting $30 billion in assets under management by the end of the year. AQR Capital Management, a pioneer in tax-aware long-short strategies, is leading the way with $21.7 billion, but other managers such as Invesco, BlackRock and Quantinno have pushed the total above at least $35 billion, Sullivan noted in a newsletter last month. "Today, advisers recognize that tax is a practice differentiator and a source of recurring client value," Sullivan wrote. "They may be torn between low-cost, passive index ETFs and direct indexing, but that debate fades into the background once they learn of tax-aware long/short strategies." On the other hand, AQR itself is seeking to "help parse the jargon of this rapidly growing but sometimes confusing area" amid some "blurring of terminology, strategy design and investment objectives," the asset management firm said in a blog post earlier this year. The company pushed back on the idea that the strategies are "only for billionaires" or simply trying to achieve benchmark returns, along with the notion that they are a form of "supercharged direct indexing." While their tax benefits "are larger and last longer" than those of direct indexing, the two strategies come from "diametrically opposite starting points (active management for the former versus passive indexing for the latter)," the post said. "Tax-aware long-short factor strategies realize higher tax benefits than direct indexing not because they try harder, but because they (1) trade quite a bit due to changes in pretax alpha, (2) hold large positions relative to invested capital due to leverage, and (3) can slow unnecessary gain recognition without significantly impacting pretax alpha, thanks to relatively long holding periods and highly diversified portfolios," the company wrote. "The core strength of tax-aware long-short strategies lies in their ability to align pretax performance with the needs of tax-sensitive investors." READ MORE: A complex but tax-friendly approach to diversification Those characteristics may eventually pose tax problems with a client's estate plans, Sulllivan noted. Estates face an obligation to settle any debts. "The strategy is effectively over," he told FP. "You will realize a ton of capital gains if you suddenly, without planning, close the long and short positions." Advisors and their clients could take steps to wind down the leverage "years and years in advance" with as low tax exposure as possible, he said. Or they could set up an intentionally defective grantor trust or another entity instructing the trustee to manage the strategy based on a "prudent investor standard" and a long-term plan for the estate and its heirs, Sullivan said. Since "you do not want to be auto-liquididated" upon the benefactor's death, some of the "the brightest minds out there are thinking about trust structures" to hold the tax-aware long-short strategies, he said. "That can be a real tax drag for any assets passing to beneficiaries," Sullivan said. "What you do is, make sure that the trust is properly structured to continue holding margin and short positions. You're essentially transferring the entire balance sheet of the strategy." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
09-05-2025
- Business
- Yahoo
Secret Sauce to AQR's Return Strategy
AQR's long-short strategy is paying off. The quant powerhouse was up over twelve percent in the first quarter, outperforming many other stock-focused hedge funds. Jordan Brooks, Principal and Co-Head of the Macro Strategies Group at AQR Capital Management joined Wall Street Beat on Bloomberg Open Interest to talk about his firm's strategy and why US treasury holders may be disappointed. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
