Back to Hedge Fund 100 Firm Profile Ranking

2. AQR Capital Management / $69.7 billion

Location:

Greenwich, CT.

Founded:

1998

2016 Hedge Fund 100 Rank:

No. 3

2016 Capital:

$47.2 billion

2015 Hedge Fund 100 Rank:

No. 4

2015 Capital:

$39.1 billion

Years on List:

Website:

www.aqr.com

Address:

2 Greenwich Plaza
Greenwich, CT 06830

Phone:

203-742-3600

Fax:

203-742-3100

Profile & News

Firm Overview

Many famous hedge fund managers have declared that they never want to manage money for retail investors, but AQR Capital Management’s outspoken co-founder, Clifford Asness, 50, is a staunch advocate for getting hedge fund strategies into the hands of mom-and-pop investors. And he’s hoping that these investors will also put pressure on what he thinks are unduly high fees charged by most hedge fund firms. If inviduals can access profitable investment opportunities at low cost, his theory goes, institutions should too.

Although retail investors pay lower fees, the firm’s courting of this investor base has turned out to be a fairly shrewd move, at least in terms of growing assets. Like many firms, AQR endured significant redemptions following the 2008 crisis, when hedge fund assets slumped from $10 billion to $6.4 billion and AQR’s Absolute Return Fund lost 45.7 percent. But the firm has rebounded sharply since then, with hedge fund assets rising by nearly 1,000 percent since 2009, thanks to several new funds and strategies that attracted new investors.

The firm adopted a mutual fund strategy in 2011 that opened three core equity opportunities to individual investors instead of an exclusive institutional investor market. AQR’s success with so-called “liquid alternatives” — mutual funds that use hedge fund-type strategies — helped it produce strong returns in the second half of 2015, despite increased market volatility and middling results from other liquid-alt competitors. Today, AQR manages $187.6 billion in firmwide assets.

Asness is considered a pioneer in the field of quantitative management. In 1995 three of AQR’s four founding principals – Asness, Robert Krail and John Liew – launched the Quantitative Research Group at Goldman Sachs Asset Management and the famed Global Alpha fund, a quant vehicle that produced superior returns at the time regardless of stock market performance. The trio carried this strategy to AQR, which stands for “applied quantitative research,” three years later alongside Goldman Sachs colleague David Kabiller.

Momeuntum investing, which is a trading strategy based on the theory that a stock that is performing a certain way will continue to perform that way for at least a short time, has also accounted for AQR’s success. As a Ph.D. candidate at the University of Chicago in the early 1990s, Asness explored momentum investing in his dissertation and empirically proved it’s feasible to outperform the market by employing this strategy over long periods of time.

Strategy

The firm specializes in quantitative investment analysis and offers long-only funds and alternative investments. The firm employs strategies based on internally conducted research, including convertible and merger arbitrage, equity, macro and managed futures, and risk parity. Unlike many of its peers, AQR doesn’t look at Wall Street research, communicate with corporate management or employ fundamental research analysts.

Funds and Fees Overview

The AQR funds are made up of 18 different series, each a “Series Fund.” These are categorized as alternative investment funds, momentum funds, equity funds and global allocation funds.

Fees
Annual Fixed Fee	0.15 percent to 2.85 percent of net assets per annum	Paid monthly or quarterly in advance
Performance Fee	Up to 20 percent of profits

A minimum initial investment in an AQR-managed account ranges from $50 million to $100 million. However, investments through advisors and 401(k) plans have no minimum.

Clients

AQR Capital Management’s investors include endowments, pensions, insurance companies, foundations and sovereign wealth funds. AQR also manages registered investment companies, collective investment vehicles, private investment partnerships, foreign investment companies and separately managed accounts.

Regulatory Assets Under Management (RAUM)*
Discretionary	$243.98 billion (398 accounts)
Nondiscretionary	$0 (0 accounts)
Total	$243.98 billion (398 accounts)

Employees	722
Clients	400 total	45 percent non-U.S.
Fiscal Year Ends	December
All data as of December 31, 2016. *Regulatory Assets Under Management (RAUM) includes no deduction of offsetting liabilities, thus representing gross AUM, not net AUM. RAUM calculations include leverage, proprietary assets and uncalled capital commitments, among other items not required in the calculation of AUM.

Owners and Executives:

Name	Position	Position Held Since
Clifford Asness	President, Founding and Managing Principal	01/1998
David Kabiller	Founding Principal	01/1998
John Liew	Founding Principal	01/1998
Bradley Asness	Co-COO	04/2017
John Howard	COO, CFO	02/2011
Herbert Willcox	CCO	08/2013
Bill Fenrich	CLO	04/2017