As of 2018, AQR ranked second in the world in terms of assets managed in hedge funds, and its founders, including Cliff Asness, made it to Forbes' billionaire list. Over the past five years, AQR has demonstrated impressive results, attributed to the implementation of a new investment strategy based on artificial intelligence.
Last year was significant for many hedge funds and quantitative firms, and AQR was no exception. The volume of assets it manages increased to $187 billion, which is $73 billion more than in 2025. Each of the three founders has increased their personal wealth, and Forbes reports on this in its material.
Cliff Asness, the Chief Investment Officer of AQR and the largest shareholder with a 30% stake, now has a net worth of $6.3 billion, placing him at 664th in the global ranking of the richest people. His co-founders, John Liu and David Kabiller, have also increased their wealth to over $2 billion each. They founded AQR in 1998 after working at Goldman Sachs Asset Management and continue to actively invest in their funds, linking their personal wealth to the company's success.
Last year, the multi-strategy fund Apex AQR, managing assets of $6.7 billion, showed a return of 19.4%, while the long-short fund Delphi (also with assets of $6.7 billion) demonstrated 16.7%. According to an anonymous source, on average over the past five years, both funds have shown returns of 16.6%, while the S&P 500 over the same period was 14.4%. Among more than 20 open-end mutual funds at AQR, the market-neutral strategies fund, managing $3.2 billion, grew by 26.5% in 2025, and its average annual return over the past five years was 19.6%, while most funds in this category achieve only about 8%.
If AQR maintains its current growth rate, it could surpass its record from 2018, when the volume of managed assets reached $226 billion. This is an impressive recovery process for a company that just four years ago managed less than $100 billion and faced issues of low efficiency and client outflows.
Radical changes at AQR coincided with a new project to implement artificial intelligence and expand machine learning methods for analysis and trading. As a factor investor, AQR used traditional methods and metrics of value investing, such as the price-to-book ratio and return on equity, to identify overvalued or undervalued stocks. Previously, this work was done manually, but it is now automated using machine learning, allowing for the identification of complex relationships between factors and processing large volumes of data to find trading signals. Analysts also use natural language processing technologies, such as ChatGPT and Claude, to enhance market research models.
The founders of AQR, Asness and Liu, studied under Eugene Fama, a Nobel Prize-winning economist from the University of Chicago. However, AQR was late to adopt AI, allowing other firms like Renaissance Technologies and D.E. Shaw to get ahead. In 2018, AQR established the position of Head of Machine Learning for the first time, but this specialist worked for only seven months. His successor, Brian Kelly, a finance professor at Yale University, became known for his work. In December 2021, he co-authored a scientific paper claiming that more complex machine learning models outperform simpler ones in predicting stock returns. Despite criticism from other scholars, AQR continues to defend the validity of its team's conclusions.
Later, Cliff Asness himself became an active advocate for AI, stating that AQR is increasingly trusting machines. Nevertheless, team members emphasize that technologies are merely evolving, not revolutionizing the work process. One employee noted, "While AI and machine learning certainly help us achieve our goals, it's just evolution, not revolution."
Nonetheless, a "revolution" is occurring in a less publicly visible part of the business—the distribution segment, where AQR seeks to meet the growing interest from financial advisors. These professionals are looking for funds that can offer tax benefits to their wealthy clients. Unlike AQR's traditional segment, which includes pension funds and target funds, the new client base has become a primary source of capital for the company. The CEO of Affiliated Managers Group, which holds a minority stake in AQR, recently stated that the advisor client base provides "significant and organic capital growth," and his company owes its annual net income of $51 billion to AQR.
Especially noticeable is the growth of individually managed accounts using the Flex tool, which AQR offers to advisors and wealthy clients. The Flex portfolio buys stocks expected to rise in price while simultaneously "shorting" those expected to decline. This allows for profit from both positions, minimizing market fluctuations and limiting taxable payouts, enabling investors to keep more after taxes. Last year, Flex managed $23.2 billion, and within nine months, this amount nearly doubled to $45.4 billion. Currently, Flex accounts for almost a quarter of all AQR assets.
According to Justin deTray, an advisor from WealthSpire, which manages $580 billion, Flex attracts registered investment advisors due to low fees and a good reputation, which new market players cannot offer. Additionally, long-term trends are influencing this: for instance, new tech millionaires are seeking ways to protect their capital after the stock market's rise. "Many potential clients have unrealized gains from the 'Magnificent Seven' stocks or hyperscalers, and these are indeed significant amounts," deTray asserts. "AQR is in an excellent position and has every chance to occupy this niche."
Can AQR maintain its current growth? Market volatility, largely driven by the policies of U.S. President Donald Trump, typically favors hedge funds and quantitative firms. However, the question remains whether AQR can remain competitive if its models do not outperform the market in the coming years, while other hedge funds are also actively implementing their AI-based quantitative strategies.
The post How Three Billionaire Investors Doubled Their Wealth in a Year Thanks to AI first appeared on K-News.
