As stocks and commodities plunged to kick off the new year, Cliff Asness’s liquid alternative mutual funds went the other way -- making money for investors.
That performance extends a winning streak of the so-called liquid alt mutual funds run by AQR Capital Management, which was co-founded by Asness and is best known for its hedge funds. AQR Capital managed the top-performing liquid alt fund in 2015, returning 17.6 percent, according to data compiled by Bloomberg. It’s up 2.6 this year through Wednesday.
The mutual funds, which are designed to mimic hedge fund strategies, became popular after the 2008 financial crisis as investors flocked to vehicles that promised returns with fewer ups and downs than the stock market. While AQR has gathered $16.4 billion into its liquid alt funds, making it the category leader, according to Morningstar Inc., other firms have stumbled. More than half of the roughly 100 alternative funds with at least $250 million in assets lost money last year, according to Bloomberg data.
“AQR is the poster child for a hedge fund firm finding success in mutual funds,” said Bradley Alford, founder of Alpha Capital Funds Management, who owns a number of AQR products for clients. “They are crushing it in an area where others have failed.”
AQR’s strong results have caught the attention of investors, who sent the firm almost $5 billion in cash last year. The $353 million AQR Equity Market Neutral Fund was the top performer in 2015 among the liquid alts, followed by the $594 million AQR Long-Short Equity Fund, which returned 17 percent. Both funds take long and short equity positions.
The $2.6 billion AQR Multi Strategy Alternative Fund rose 9.3 percent in 2015, ranking fourth, and the $2 billion AQR Style Premia Alternative Fund climbed 8.8 percent, seventh best in the group of some 100 funds.
Three of these four AQR funds also gained in the first eight trading days of 2016, even as the Standard & Poor’s 500 Index dropped 7.5 percent. The same group of alternative funds declined an average of 1.3 percent this year, with a majority in negative territory.
Whitebox Shutters Funds
AQR Capital, which manages $141 billion, succeeded in a market that clobbered many of its rivals last year, including Gotham Asset Management and Pacific Investment Management Co., whose liquid alt funds ranked among the weakest performers in 2015. Six categories of alternative funds tracked by Morningstar showed average losses of between 0.1 and 5.1 percent for last year.
Whitebox Advisors, a $3.85 billion investment firm best known for running hedge funds, last month said it would close its three mutual funds -- two of them liquid alts -- after the funds suffered losses and redemptions.