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{{Short description|American hedge fund manager}}{{use mdy dates|date=April 2020}}

factoids

| birth_place = New York City, U.S.| death_date = | death_place = University of Pennsylvania University of Chicago Graduate School of Business>University of Chicago Booth School of Business| occupation = Hedge fund manager| spouse = Laurel Elizabeth FraserAQR Capital>AQR Capital Management| parents = | awards = }}Clifford Scott Asness ({{IPAc-en|ˈ|æ|z|n|ə|s}}; born October 17, 1966) is an American hedge fund manager and the co-founder of AQR Capital Management. According to an April 2020 Forbes profile, Asness' estimated net worth was $2.6 billion.

Early life and education

Asness is JewishWEB,weblink Transcript: Cliff Asness, March 21, 2023, and was born to a Jewish family, in Queens, New York, the son of Carol, who ran a medical education firm, and Barry Asness, an assistant district attorney in Manhattan who was a former Golden Gloves boxer.WEB,weblink Man vs. Machine on Wall Street: How Computers Beat the Market, William D., Cohan, March 29, 2011, The Atlantic, His family moved to Roslyn Heights, New York, when he was four. He attended the B'nai B'rith Perlman Camp, and graduated from Herricks High School.NEWS,weblink Asness Meets 'Grim Reaper' Before Fund Rebounds From 50% Loss, Richard, Teitelbaum, October 7, 2010, February 4, 2019, November 5, 2018,weblink live, A full-length 2010 biography and history of AQR.In 1988, Asness graduated summa cum laude from the University of Pennsylvania, from which he received bachelor's degrees double-majoring in computer science and finance as part of the Jerome Fisher Program in Management and Technology (M&T). Asness's interest in finance and portfolio management began while he worked a research assistant in the Finance Department at Wharton, where he learned to use "coding computer programs" to analyze markets" and "test economic and financial theories".In 1989, Asness enrolled at the University of Chicago Booth School of Business, where he received his MBA with high honors in 1991, and his PhD in finance in 1994.{{Citation| title = Clifford S. Asness| series = Distinguished Alumni Awards| work = Chicago Booth| access-date = April 27, 2020| date = 2004| url =weblink| archive-date = April 18, 2020| archive-url =weblink| url-status = live}}WEB,weblink How Cliff Asness Became A Billionaire By Building A Kind Of Vanguard Of Hedge Funds, Vardi, Nathan, Forbes, en, April 25, 2020, August 5, 2020,weblink live, At Chicago, Asness was the teaching assistant (TA) for his dissertation adviser, Nobel laureate Eugene Fama — who was also Asness' mentorAV MEDIA, Are Markets Efficient? Baloney, Says Money Man Cliff Asness, April 22, 2014, Forbes via YouTube, April 27, 2020,weblink — and the economist, Kenneth French, who were both influential and widely-respected empirical financial economists, had established the foundations of their Fama–French three-factor model in 1992.JOURNAL, Fama, E. F., Eugene Fama, French, K. R., Kenneth French, 10.1016/0304-405X(93)90023-5, Common risk factors in the returns on stocks and bonds, Journal of Financial Economics, 33, 3–56, 1993, 10.1.1.139.5892, The Fama–French three-factor model expanded the Capital Asset Pricing Model (CAPM) by adding risk factors—size and value. Fama and French had contrasted value stocks with growth stocks. Since Fama and French's inception of value stocks, "quants have designed algorithms that can scour market data" looking for "factors".Asness' doctoral dissertation was on "the performance of momentum trading, buying stocks with rising prices". Asness asserted that profits consistently beating market averages were attainable by exploiting both value and momentum. Asness concept of value was referred to in the context of fundamental analysis as a way of assessing the true worth of a security. His use of the concept of momentum referred to betting that the value will continue to go up or down as it did in the recent past. While he did not originate these concepts, Asness was credited with being the first to compile enough empirical evidence across a wide variety of markets to bring the ideas into the academic financial mainstream.

Career

Global Alpha

Asness started his career in 1990, when he was 24 and still a PhD student. In the early 1990s, he had left academia, to the regret of his mentor, to become manager of Goldman Sachs Asset Management's (GSAM) "new quantitative research desk." He invited two friends from his cohort at the University of Chicago to join him at GSAM. Together, they began "developing models to evaluate risk in currencies, bonds and entire economies." While the "idea of factors" came from Fama and French, it was first "put into practice" in the late 1990s by Asness, according to The Economist. Asness and his team at GSAM built on Fama and French's idea of factors, and combined their work with insights he had gained from his own PhD research.NEWS, 0013-0613, The stockmarket is now run by computers, algorithms and passive managers, The Economist, April 25, 2020, October 5, 2019,weblink April 25, 2020,weblink live, Asness worked as GSAM manager until 1997, when he and some members of the GSAM team, left to start their own quantitative hedge fund.WEB, The Ode: Goldman's global alpha fund, Canadian Business, Joe, Castaldo, October 6, 2011, April 25, 2020,weblink September 21, 2019,weblink live, In 1995, Asness persuaded a few partners at Goldman to provide him with an initial US$10-million investment to employ the computer-driven models that his team had developed, to invest in the market.NEWS, Rappaport, Liz, Goldman to Close Global Alpha Hedge Fund, The Wall Street Journal,weblink April 25, 2020, Markets, September 16, 2011, United States, en, subscription, 0099-9660, August 1, 2020,weblink live, NEWS, Goldman Sachs to Shut Its Global Alpha Hedge Fund,weblink May 18, 2017, The New York Times Company, DealBook, The New York Times, September 15, 2011, United States, en, limited, August 8, 2017,weblink live, When the $10 million initial investment reached $100 million, Goldman opened the fund to the public—the Goldman Sachs Global Alpha Fund. Global Alpha, a systematic trading hedge fund was one of the earliest "quant vehicles" in the industry. The fund became known for high-frequency trading and furthered the careers of Asness and Mark Carhart. Asness and his team used complicated computerized trading models to first locate underpriced equities, bonds, currencies, and commodities and then use short selling to take advantage of upward or downward price momentum. The fund was designed to make money regardless of the direction the market was moving. The Wall Street Journal described Asness and Carhart as "gurus" who managed Global Alpha, a "big, secretive hedge fund"—the "Cadillac of a fleet of alternative investments" that had made millions for Goldman Sachs by 2006.NEWS, 0099-9660, Smith, Randall, Goldman Gurus Strike It Rich With Hedge Fund, The Wall Street Journal, April 25, 2020, April 20, 2006,weblink August 1, 2020,weblink live, By 2007, at its height, Global Alpha was "one of the biggest and best performing hedge funds in the world" with more than $12 billion assets under management (AUM).NEWS, How Goldman Sachs Lost One Of Its Crown Jewels, Global Alpha, John, Carney, September 16, 2011, Business Insider via CNBC, April 24, 2020,weblink August 1, 2020,weblink live, Global Alpha was shutdown in the fall of 2011. The quant fund had declined significantly by mid-2008, and continued its decline to $1 billion AUM through 2011.NEWS, LaCapra, Lauren Tara, Herbst-Bayliss, Svea, Goldman to close Global Alpha fund after losses,weblink April 25, 2020, Thomson Reuters, Reuters, September 16, 2011, New York, N.Y., United States, en, March 28, 2020,weblink live,

AQR Capital Management

In 1998 in New York, when he was 31-years old, Asness, David Kabiller, John Liew, and Robert Krail, co-founded AQR Capital Management, a "quantitative hedge fund firm."In 2002, Asness made $37 million, and in 2003, he made $50 million. In 2004, AQR moved its headquarters from New York to Greenwich, Connecticut.AQR—Applied Quantitative Research—suffered losses during both the "2007 quant meltdown" and the 2008 financial crisisBy the end of 2010, AQR had $33 billion assets under management (AUM).WEB, Profile, Cliff Asness,weblink Forbes, April 25, 2020, April 25, 2020, May 18, 2020,weblink live, WEB,weblink AQR Capital Management,weblink" title="web.archive.org/web/20100317135904weblink">weblink March 17, 2010, April 25, 2020, An October 2010 Bloomberg article, described AQR as a "quantitative investment firm" that used "algorithms and computerized models to trade stocks, bonds, currencies and commodities."In 2016, Connecticut's State Bond Commission gave $35 million in financial aid to AQR, as part of a "broader move by the Connecticut government to persuade companies", including Bridgewater Associates, the biggest hedge fund in the world, to remain in Connecticut.NEWS,weblink Investment Funds Get Millions to Stay in Connecticut, Stevenson, Alexandra, November 22, 2016, The New York Times, February 5, 2019, en-US, 0362-4331, February 7, 2019,weblink live, AQR's $28 million loan, would be "forgiven" if AQR kept "540 jobs within Connecticut" and created 600 new jobs by 2016. AQR received grants worth $7 million to "help pay for an expansion."By 2017, according to Forbes, Asness had "moved away from hedge funds" and aggressively promoted lower-fees, more "liquid and transparent products", such as "mutual funds, that use computer models, often to replicate hedge fund returns".By 2019, AQR had become an "investment firm"—running "one of the world's largest hedge funds". A 2020 Forbes profile described AQR (Applied Quantitative Research) as an agency that employs "factor-based investing," and offers products ranging from hedge funds to mutual funds.In 2023, Asness, Stable Asset Management, and other institutional investors in the aggregate made commitments of several hundred million dollars in the newly launched Niche Plus multimanager hedge fund, the first fund of ClearAlpha Technologies.

Selected academic publications

In a co-authored 2001 article published in the Journal of Portfolio Management, the authors described how, while some hedge fund managers are skilled in picking stocks, not all use effective methods.JOURNAL, Asness, Cliff, Robert, Krail, John, Liew, 2001, Do hedge funds hedge? Be cautious in analyzing monthly returns, Journal of Portfolio Management, 28, 6–19, 10.3905/jpm.2001.319819, 219223059, In their 2003 publication in the Financial Analysts Journal, Arnott and Asness wrote that contrary to prevailing theory, companies that paid higher dividends, actually had higher growth in earnings.JOURNAL, Robert D., Arnott, Asness, Cliff, January 2003, Financial Analysts Journal,weblink Surprise! Higher dividends = higher earnings growth, 59, 70–87, 10.2469/faj.v59.n1.2504, 43016921, April 24, 2020, April 14, 2015,weblink" title="web.archive.org/web/20150414100022weblink">weblink live, They found that low payout ratios "preceded low earnings growth." In a 2003 Journal of Portfolio Management article, Asness said that it was a mistake to compare stock market's P/E ratio—earnings yield—to interest rates (called the Fed model).JOURNAL, Asness, Cliff, 2003, Fight the Fed Model, Journal of Portfolio Management, 30, 11–24, 10.3905/jpm.2003.319916, 155012499, In a 2013 co-authored article published in The Journal of Finance, Asness, Tobias Moskowitz, and Lasse Pedersen found "consistent value and momentum return premia across eight diverse markets and asset classes, and a strong common factor structure among their returns."JOURNAL, 10.1111/jofi.12021, 0022-1082, 68, 3, 929–985, Asness, Clifford S., Moskowitz, Tobias J., Pedersen, Lasse Heje, Value and Momentum Everywhere: Value and Momentum Everywhere, The Journal of Finance, June 2013,weblink 10398/9cef71a9-adf5-4d83-925d-53c571dd0691, free, WEB, Editorial, The relation between value and momentum strategies, Systemic Risk and Systematic Value (SRSV), April 25, 2020, July 20, 2019,weblink March 12, 2020,weblink live, Since this strategy for accumulation is subject to the same constraints as any other and systemic effects in markets can invalidate it: AQR and other similar ventures lost massive amounts of wealth in the Financial crisis of 2007-2010 with assets declining from $39 billion in 2007 to $17 billion by the end of 2008.NEWS,weblink Fortune, Cliff Asness: A hedge fund genius goes retail, Shawn, Tully,weblink" title="web.archive.org/web/20131103173618weblink">weblink November 3, 2013, April 25, 2020, December 19, 2011, According to Systemic Risk and Systematic Value, "Value investment means buying (or overweighing) securities that rank high on conventional valuation scales, such as book-price ratios or forward earnings yields. Momentum trading means 'going long' securities that have outperformed in the recent past."

Publications about Asness

The New York Times published a profile of Asness on June 5, 2005.NEWS, 0362-4331, Nocera, Joseph, The Quantitative, Data-Based, Risk-Massaging Road to Riches, The New York Times, April 24, 2020, June 5, 2005,weblink December 15, 2019,weblink live, The Times said that "what Asness really does is try to understand the relationship between risk and reward."Asness was featured in Scott Patterson's 2010 publication, (The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It|The Quants),BOOK, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, Scott, Patterson, Scott Patterson (author), Crown Business, February 2, 2010, 352, 978-0-307-45337-2, along with Aaron Brown from AQR Capital Management, Ken Griffin from Chicago's Citadel LLC, James Simons from Renaissance Technologies, and Boaz Weinstein from Deutsche Bank.WEB, 'The Quants': It Pays To Know Your Wall Street Math,weblink NPR, February 1, 2010, April 25, 2020, May 23, 2020,weblink live, WEB, Pressley, James, Citadel's Griffin Skirts Disaster, Taleb Fumes: Books (Update1),weblink Bloomberg L.P., February 10, 2010, April 25, 2020, September 24, 2015,weblink" title="web.archive.org/web/20150924150529weblink">weblink live, a "scourge of bad practices in the money management industry" with the "intellectual chops to back up his attacks". Patterson said that Asness was known as "one of the smartest investors in the world." He had been a "standout student at the University of Chicago's prestigious economics department in the early 1990s, then a star at Goldman Sachs in the mid-1990s before branching out on his own in 1998 to launch AQR with $1 billion and change, a near record at the time."

Economic and political commentary

Asness frequently comments on financial issues in print and on CNBCWEB,weblink Top Wall Street quant Cliff Asness doesn't believe AI will revolutionize investing, Kim, Tae, 2017-11-03, www.cnbc.com, 2019-02-05, February 7, 2019,weblink live, and other television programs. He has frequently spoken out against high hedge fund fees. In particular, he has been critical of hedge funds with high correlations to equity markets, delivering stock index fund performance (which is available cheaply) at prices that could only be justified by extraordinary market insight that only the best hedge funds seem to deliver consistently.In 2008, he complained about short-selling restrictions in The New York Times.Joe Nocera: Cliff Asness Is Mad as Hell {{Webarchive|url=https://web.archive.org/web/20101222150736weblink |date=December 22, 2010 }}. September 21, 2008 In a 2010 The Wall Street Journal op-ed (written with Aaron Brown) he claimed the Dodd-Frank financial reform bill would lead to regulatory capture, crony capitalism and a massive "financial-regulatory complex."NEWS,weblink The Treasury-Financial Complex, Clifford S., Asness, Brown, Aaron, May 13, 2010, The Wall Street Journal, en-US, 0099-9660, August 3, 2017, October 27, 2020,weblink live, In Bloomberg columns, he discussed taxation of investment managersWEB,weblink Money Managers May Face New Tax Increase: Clifford S. Asness, June 14, 2010, Bloomberg.com, March 6, 2017, February 11, 2014,weblink" title="web.archive.org/web/20140211152629weblink">weblink live, and healthcare reform.WEB,weblink 'Don't Ask' Is No Way to Run Health Care: Clifford S. Asness, bloomberg.com, March 6, 2017, September 24, 2015,weblink" title="web.archive.org/web/20150924133627weblink">weblink live, He posts commentary on financial issues, generally from a libertarian and efficient markets viewpoint.WEB,weblink stumblingontruth, stumblingontruth.com, September 1, 2010, August 26, 2010,weblink" title="web.archive.org/web/20100826011909weblink">weblink live, In an unpublished 2000 paper, "Bubble Logic," Asness criticized "nonsensical" and "unsustainable stock prices"WEB, The Long and the Short of It, Han, Hu, Wharton Magazine, April 25, 2020, September 1, 2006,weblink that caused the stock market tech bubble of 1999–2000. In a special 60th anniversary edition of The Financial Analysts Journal he said that this was also the fifth anniversary of the stock bubble peak,NEWS, Rubble Logic: What Did We Learn from the Great Stock Market Bubble?, 2005, Clifford S., Asness, The Financial Analysts Journal, he repeated his criticisms the tech bubble and those who claimed options should not be expensed.JOURNAL, Stock Options and the Lying Liars Who Don't Want to Expense Them, Financial Analysts Journal, 60, 4, July 1, 2004, Clifford S., Asness, NEWS,weblink Jesse, Eisinger, The Wall Street Journal, Long and short,weblink" title="web.archive.org/web/20110710165853weblink">weblink July 10, 2011, April 25, 2020, WEB,weblink Whitney, Tilson, The Motley Fool, Stock options hurt US competitiveness, September 24, 2004, September 5, 2010, October 10, 2012,weblink" title="web.archive.org/web/20121010144907weblink">weblink live, He was also known as an outspoken critic of U.S. president Barack Obama.WEB,weblink Meet President Obama's Newest Opponent, Clifford Asness, ABC News, ABC News, September 7, 2010, August 25, 2010,weblink" title="web.archive.org/web/20100825172343weblink">weblink live, Two tracts he authored protest the Obama administration's treatment of Chrysler senior bondholders.WEB,weblink Hedge-Funder Cliff Asness Is Not Afraid of Barack Obama, Jessica Pressler, Daily Intelligencer, May 6, 2009, September 5, 2010, September 4, 2010,weblink" title="web.archive.org/web/20100904111049weblink">weblink live, WEB,weblink The Protest Of A Patriot, Peter Robinson, 22 May 2009, Forbes, August 25, 2017, January 4, 2017,weblink" title="web.archive.org/web/20170104084530weblink">weblink live, In 2012, he was included in the 50 Most Influential list of Bloomberg Markets magazine.In 2013, Asness was a signatory to an amicus curiae brief submitted to the U.S. Supreme Court in support of same-sex marriage during the Hollingsworth v. Perry case.WEB,weblink The Pro-Freedom Republicans Are Coming: 131 Sign Gay Marriage Brief, Avlon, John, February 28, 2013, The Daily Beast, March 5, 2013, October 6, 2014,weblink" title="web.archive.org/web/20141006115616weblink">weblink live, WEB,weblink JTA, Jewish, Republican, pro-gay rights, Ron, Kampeas,weblink" title="web.archive.org/web/20111213231257weblink">weblink December 13, 2011, May 14, 2011, April 25, 2015, In 2023, Asness declared he would no longer donate to his alma mater University of Pennsylvania due to their hosting the Palestine Writes festival, the minimal response to the Israel-Gaza war (2023-present) and what he called a “drift away from true freedom of thought, expression and speech.”WEB, Egan, Matt, 2023-10-18, ‘Deeply ashamed.’ Another major UPenn backer halts donations and calls on other Jews to do the same,weblink 2024-04-25, CNN, en,

Personal life

In 1999, Asness married Laurel Elizabeth Fraser of Seward, Nebraska, the daughter of a retired Methodist pastor.NEWS,weblink Weddings, Laurel Fraser and Clifford Asness, August 15, 1999, The New York Times, February 7, 2017, September 12, 2017,weblink" title="web.archive.org/web/20170912174352weblink">weblink live, Asness has four children.He sold his Miami Beach penthouse for $22 million in July 2020, after purchasing it from businessman Boris Jordan in May 2018.WEB,weblink Barron, November 12, 2019, Billionaire Cliff Asness to List Trophy Miami Penthouse for 29.5 Million, November 11, 2019,weblink live, WEB,weblink Billionaire Hedge Funder Sells Miami Beach Penthouse for $22 Million, Katherine, Clarke, July 31, 2020, www.mansionglobal.com,

See also

• Fed model

Notes

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References

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Academic journals

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External links

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• Interview with John Bogle
• Interview with Senator Charles Grassley

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