Clifford S. Asness was at Schwab Impact in Boston to speak about alternative strategies, specifically managed futures. The firm he founded, AQR Capital Management—Applied Quantitative Research, is known for its alternative strategies, research and institutional investment management. Several of the strategies are now available in mutual funds. Asness sat down with AdvisorOne.com/Wealth Editor in Chief Kate McBride, on Wednesday.
The AQR Funds are either “long-only strategies against a benchmark or un-constrained market neutral/absolute return strategies,” according to the AQR Funds website. AQR recently launched a new alternative strategy mutual fund, AQR Risk Parity Fund (AQRNX, Class N Shares) allocating risk across equity, fixed income, inflation and credit/currency risk; see “Asness' AQR Launches Alternative Mutual Fund.”
Right now, the U.S. Treasury 10-year yields around 2.6%, and investors actually had to pay the government around 50 basis points to buy a new issue of Treasury TIPS this week—attractive to many who believe inflation is looming because of their inflation-protection properties. One-hundred-year sovereign debt, recently sold by Mexico, yields around 5.70%, and Goldman Sachs sold $1.3 billion in 50-year unsecured senior corporate debt, priced to yield 6.125%, sold Wednesday to retail and institutional customers, according to The Wall Street Journal. Gold is regularly making new highs, and large cap stocks are trading at post-crash highs. So what does Asness think about risks here?
‘Not a Bear Nor a Screaming Bull’
Asness says he is “fairly bullish, more on equity than bonds—trends in bonds look a little more dodgy than [equities],” but added that he is “not a bear nor a screaming bull.”
Even with all of the talk of a “probable bond bubble,” he says, he watches long-term trends, not quarter-to-quarter trends. He looks at momentum and valuation in a quantitative way. In his Risk