(Pictured: Cliff Asness)
Ten years ago Affiliated Managers Group, now the world’s largest multi-affiliate manager, entered the hedge fund industry through the purchase of a minority interest in AQR Capital Management and put that firm’s star managers on a 10-year employment contract. Last week AMG bought some more of AQR and re-signed its stars.
Befitting the opaque world of hedge funds, especially quantitatively driven firms such as AQR, details of the initial deal announced in November 2004 were scant, just as details of the latest deal were when announced last week.
All we know for sure is that AMG has acquired some more AQR shares, but still has only a minority interest, and has signed long-term employment contracts with the 21 principals, including Cliff Asness, the CIO, David Kabiller, the business head, and John Liew, head of research.
Wall Street speculation in 2004 said that AMG paid between US$80-100 million for 25 per cent of AQR, which then had US$12 billion under management. AMG had about US$121 billion under management at the time. Today, AQR has US$115 billion under management and AMG has US$617 billion, as at September 30. So, AMG has clearly done well from AQR, which has grown at a faster clip than most global managers, including AMG’s managers.
AMG said that, under the new deal, AQR would continue to be managed independently. In Australia, AQR and AMG have separate staffs and offices. Furthermore, AQR will invest the money from AMG’s share purchase into its own investment funds.
Asness, who is a frequent visitor to Australia and a popular speaker on the industry conference circuit, said AMG had been “a great partner” for the past 10 years. He, Kalliber and Liew started AQR in 1998, with almost immediate success. Asness was previously the head of quant research at Goldman Sachs in New York and established one of the first quant multi-asset hedge funds.