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AQR regains its mojo as Tiger swoons

We wrote quite a bit about Shitko carnageHow is it even infected Big Tech And the damage he caused to growth vehicles like Kathy Wood and Chase Coleman. But there are people who like it right now.

Take AQR Capital Management, the investment group headed A fan of Captain AmericaA former protégé of Jin Pama and a full-time Twitter man Clifford Essence. Despite the online rampage raging in a funny way against the London Metal Exchange Earlier this year, Cliff seems to have a pretty great 2022.

FT Alphaville hears that AQR’s Absolute Return Fund – its longest and most extensive strategy involving many other funds – has accumulated another 8.3% after commissions in April, raising its gains so far to 29.7%. It comes after a An increase of 16.8 percent in 2021. Some of its other funds are also doing well, despite the current market chaos.

Although there are no signs that success softens Essence any, It must be wonderfully blessed. “After massive growth due to the growing interest in quantitative investments following the financial crisis, things went”Significantly crappy“For AQR about mid-2018 or so. (Full disclosure, This article Marked it almost perfectly.)

AQR’s managed assets went backwards, falling from a 2018 peak of about $ 226 billion to below $ 140 billion last year. This was followed by a number of rounds of layoffs. The long-term fixed income investment arm that began in 2014 was ousted last year, and about half a dozen of AQR’s top partners have left Or were dismissed.

AQR remained under pressure as assets under management fell further to $ 117 billion at the end of March, according to people familiar with the subject. But at least the performance has gone up considerably.

The neutral fund in the stock market of AQR earned another 7% to raise its returns less commissions to 19.5% per annum. A similar strategy with a stronger stock share return 35 percent so far in 2022. AQR’s stock fund rose 14.4 percent, its global macro fund returned 21 percent, and AQR’s managed futures strategy gained 26.7 percent.

Although the company declined to comment, FTAV can guess the secret behind this renaissance: an almost final decision at first. “Sin a little“And tilt some of its strategies toward value stocks back in November 2019. Oops.

A line chart of normalized performance as of May 1, 2012 showing the value of growth - until recently

When the epidemic almost immediately intensified A remarkably poor run of a century-long record For stocks this value seems like a cataclysmic error. But today it probably helps to explain why AQR is successful despite the rocky markets.

As the chart above shows, the other side of the value renaissance is the collapse of growth stocks, having completely dominated the post-financial bull market.

What we are seeing now is a dramatic regime change in what is working in the markets, caused by the rise of inflation and central banks starting to tighten monetary policy. The best example of how sudden the change was is Chase Coleman’s Tiger Global.

A year ago it warmed up enthusiastically after earning more than $ 10 billion in 2020, making it the industry’s highest-earning hedge fund according to LCH Investments. Coleman According to the report Personally earned $ 2.5 billion that year. Institutional investor wrote a profile in “How Chase Coleman became a hedge fund legend“.

Today things look a little different. Tiger Global’s hedge fund lost 43.7 percent between January and the end of April, which in dollar terms is probably one of the largest hedge fund losses in history. As we wrote earlier this week.

Still, whether AQR continues to recover or Tiger manages to make a comeback (and given the way technology stocks are vomiting again, it looks bleak), the violent capital change of two of the big players in the hedge fund industry is a deadly example of how volatile financial markets are. Yesterday’s dummies are tomorrow’s greetings, and vice versa.

give away Actor of Doom Eternal AsnessIt must feel good for a change.

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