AQR Capital Management (Applied Quantitative Research) is a global

investment management Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institut ...

firm based in

Greenwich, Connecticut Greenwich (, ) is a New England town, town in southwestern Fairfield County, Connecticut, United States. At the 2020 United States Census, 2020 census, the town had a total population of 63,518. The largest town on Connecticut's Gold Coast (Conne ...

, United States. The firm, which was founded in 1998 by

Cliff Asness Clifford Scott Asness (; born October 17, 1966) is an American hedge fund manager and the co-founder of AQR Capital Management. Early life and early education Asness was born to a Jewish family, in Queens, New York, the son of Carol, who ran a ...

David Kabiller David G. Kabiller, '' CFA'' (born 1964) is the founder, founding principal, and head of business development of AQR Capital Management, along with Cliff Asness, John M. Liew and Robert Krail. He initiated AQR's international growth and its intr ...

, John Liew, and Robert Krail, offers a variety of

quantitatively Quantitative research is a research strategy that focuses on quantifying the collection and analysis of data. It is formed from a deductive approach where emphasis is placed on the testing of theory, shaped by empiricist and positivist philoso ...

driven

alternative Alternative or alternate may refer to: Arts, entertainment and media * Alternative (''Kamen Rider''), a character in the Japanese TV series ''Kamen Rider Ryuki'' * ''The Alternative'' (film), a 1978 Australian television film * ''The Alternative ...

and traditional investment vehicles to both

institutional Institutions are humanly devised structures of rules and norms that shape and constrain individual behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions a ...

clients and

financial advisors A financial adviser or financial advisor is a professional who provides financial services to clients based on their financial situation. In many countries, financial advisors must complete specific training and be registered with a regulatory ...

. The firm is primarily owned by its founders and principals. AQR has additional offices in

Boston Boston (), officially the City of Boston, is the state capital and most populous city of the Commonwealth of Massachusetts, as well as the cultural and financial center of the New England region of the United States. It is the 24th- mo ...

Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = Country , subdivision_name ...

Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the largest city in the state of California and the second most populous city in the United States after New York City, as well as one of the world' ...

Bangalore Bangalore (), officially Bengaluru (), is the capital and largest city of the Indian state of Karnataka. It has a population of more than and a metropolitan population of around , making it the third most populous city and fifth most ...

Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...

London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...

Sydney Sydney ( ) is the capital city of the state of New South Wales, and the most populous city in both Australia and Oceania. Located on Australia's east coast, the metropolis surrounds Sydney Harbour and extends about towards the Blue Mountain ...

, and

Tokyo Tokyo (; ja, 東京, , ), officially the Tokyo Metropolis ( ja, 東京都, label=none, ), is the capital and largest city of Japan. Formerly known as Edo, its metropolitan area () is the most populous in the world, with an estimated 37.468 ...

Investment philosophy and strategies

AQR employs a research-based "systematic and consistent approach" to portfolio construction. This disciplined approach of identifying long-term, repeatable sources of return means "having a high conviction in the process, but not a high conviction in any particular stock". The firm is a strong proponent of

diversification Diversification may refer to: Biology and agriculture * Genetic divergence, emergence of subpopulations that have accumulated independent genetic changes * Agricultural diversification involves the re-allocation of some of a farm's resources to ...

within portfolios, as well as adding strategies with low

correlation In statistics, correlation or dependence is any statistical relationship, whether causal or not, between two random variables or bivariate data. Although in the broadest sense, "correlation" may indicate any type of association, in statistics ...

to traditional

asset classes In finance, an asset class is a group of financial instruments that have similar financial characteristics and behave similarly in the marketplace. We can often break these instruments into those having to do with real assets and those having ...

as a complement to existing portfolios. AQR was an early adopter of

style Style is a manner of doing or presenting things and may refer to: * Architectural style, the features that make a building or structure historically identifiable * Design, the process of creating something * Fashion, a prevailing mode of clothing ...

, or factor, investing given the strategy's academic roots. Although the four styles —

value Value or values may refer to: Ethics and social * Value (ethics) wherein said concept may be construed as treating actions themselves as abstract objects, associating value to them ** Values (Western philosophy) expands the notion of value beyo ...

momentum In Newtonian mechanics, momentum (more specifically linear momentum or translational momentum) is the product of the mass and velocity of an object. It is a vector quantity, possessing a magnitude and a direction. If is an object's mass an ...

, defensive and

carry Carry or carrying may refer to: People *Carry (name) Finance * Carried interest (or carry), the share of profits in an investment fund paid to the fund manager * Carry (investment), a financial term: the carry of an asset is the gain or cost of h ...

— have been well-known and used in quantitative investing for decades, AQR has long advocated for using these styles together, citing their diversifying qualities. AQR is perhaps best known for its alternative investment strategies, which aim to offer low correlation to traditional, equity-dominated portfolios. AQR was one of the first investment managers to offer a

risk parity Risk parity (or risk premia parity) is an approach to investment management which focuses on allocation of risk, usually defined as volatility, rather than allocation of capital. The risk parity approach asserts that when asset allocations are a ...

strategy, which aims to balance allocations based on underlying

risk In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environme ...

rather than asset classes. The firm also offers managed futures, a trend-following strategy that is “uncorrelated with other asset classes” and supported by over a century of academic evidence. AQR was one of the first investment management firms to offer alternative mutual funds, launching its family of

mutual fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV i ...

s in 2009. The firm's liquid alternative strategies were a “category leader” in Morningstar’s ranking for 2015.

History

Three of AQR's founding principals —

, Robert Krail and John Liew — met in the

University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...

’s PhD program, where the foundation of the firm's investment philosophy took shape. While still working on his dissertation, which focused on momentum and value, Asness joined

Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, H ...

, where he was asked to lead a new quantitative research team within the firm's asset management division. Liew and Krail joined him, and the new team applied what they learned in academia to manage both hedge-fund and long-only assets. In 1998, Asness, David Kabiller, Krail and Liew left Goldman Sachs to establish AQR. AQR was among the first hedge fund managers to voluntarily register at its inception with the

Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

. The firm's first product was a hedge fund, though it soon (2000) entered into traditional portfolio management. In 2001, AQR had nearly $750 million assets under management. In 2004, AQR had $12 billion assets under management. The firm opened its first international office in Australia in 2005. In 2009, AQR became one of the first investment managers to offer alternative mutual funds. In 2011, the firm opened an office in the UK. As of Q3 2019, the firm had $185 billion in assets under management. After AQR Annual Profit plunged 34% in 2018, the management firm announced job cuts in January 2019.

Assets under management

Ties to academia

As of 2016, approximately half of the AQR's employees have earned advanced degrees, with 52 holding

PhDs A Doctor of Philosophy (PhD, Ph.D., or DPhil; Latin: or ') is the most common degree at the highest academic level awarded following a course of study. PhDs are awarded for programs across the whole breadth of academic fields. Because it is ...

. In 2015, AQR established QUANTA Academy, the firm's learning and development program, which is focused on three core pillars: Technical Skills and Knowledge, Leadership and Management, and Personal Enrichment. With a focus on lifelong learning, the program is designed to help employees reach their full potential through hundreds of courses annually.AQR.com AQR's Insight Award (see below), which “recognizes the most significant and innovative academic research that offers practical applications for investors,” awarded its fifth annual slate of winners in 2016. In 2014, AQR partnered with the

London Business School London Business School (LBS) is a business school and a constituent college of the federal University of London. LBS was founded in 1964 and awards post-graduate degrees (Master's degrees in management and finance, MBA and PhD). Its motto is " ...

to establish The AQR Asset Management Institute, which focuses on asset management research and thought leadership. The Institute rewards scholars in the field with annual grants and prizes. AQR donated more than $15 million to be spread out over ten years. The firm is also a sponsor of the AQR Top Finance Graduate Award at

Copenhagen Business School Copenhagen Business School (Danish'': Handelshøjskolen i København'') often abbreviated and referred to as CBS (also in Danish), is a public university situated in Copenhagen, Denmark and is considered one of the most prestigious business schoo ...

, which honors the PhD graduates whose research carries the greatest potential impact.

References

External links

Official website
{{DEFAULTSORT:Aqr Capital Management Hedge fund firms of the United States Hedge fund firms in Connecticut Financial services companies established in 1998 1998 establishments in Connecticut Hedge funds Investment management companies of the United States