Cliff Asness

Founder, Managing Principal, and Chief Investment Officer of AQR Capital Management

Mentions

Appeared in

Discussed in

Key positions and views

The vast majority of buffered funds are poor investment products that underperform simpler strategies while failing to reduce drawdowns, and AQR formally recommends against them [19, 23].

The U.S. stock market's historical outperformance is unlikely to be repeated, as it was largely driven by a valuation shift from cheaper-than-global to more-expensive-than-global markets [22, 28].

The value investing factor is poised for a period of above-normal returns over the next two to three years, and its recent strong correlation with interest rates is likely a market mistake [2, 9].

Trend-following strategies offer a form of market protection with a 'negative cost' because they have a modest positive expected return over the long term [8].

Many investors allocate to private equity not for superior performance but to smooth the appearance of portfolio returns, taking advantage of infrequent and subjective valuations [10].

Podcast consensus on Asness

Points of consensus

▶Cliff Asness consistently expresses skepticism about the current market environment, noting that stock prices remain high relative to historical fundamentals and bond yields are still historically low, despite recent market downturns and rate increases [11, 12].Apr 2026

▶He is highly critical of certain complex financial products, arguing that single-day options and the vast majority of buffered funds primarily benefit brokers and lead to underperformance and larger drawdowns for investors [18, 19, 20, 23, 25].Apr 2026

▶Asness believes in the power of quantitative factors, asserting that they can explain a significant portion of legendary investor returns (like Warren Buffett's) and that specific factors, like value, are poised for future outperformance [9, 17].Apr 2026

▶He views the high-fee structure common in asset management, such as 'two and 20' for simple quantitative strategies, as unsustainable in a competitive market and notes that his firm, AQR, has contributed to general fee compression [6, 7].Apr 2026

Points of debate

▶Asness's network of technical experts is sharply divided on cryptocurrency, with half viewing it as a Ponzi scheme and the other half believing DeFi will become ubiquitous, reflecting a significant debate even within his own circle [3].Apr 2026

▶There is a tension between his assertion that the market is mistaken to correlate the value factor with interest rates and his own observation that AQR's value strategy began its recovery in late 2020, preceding but close to the period of rising rates [2, 15].Apr 2026

▶A contrast exists between AQR's stated philosophy of discontinuing any product that is no longer effective for clients [26] and the significant decline in the firm's assets under management from its peak of approximately $200 billion, which suggests a period of client dissatisfaction or underperformance [16].Apr 2026

▶Asness presents a nuanced view on market timing, predicting above-normal returns for the value factor over the next few years [9] while simultaneously cautioning investors against chasing 'the hot thing' in their careers, which often results in being too late [14].Apr 2026

Key themes

▶Critique of Financial Products and Industry PracticesApr 2026

Asness frequently criticizes financial products he deems detrimental to investors, such as buffered funds and single-day options, which he compares to gambling. He argues these products are designed to be profitable for Wall Street firms rather than to deliver superior returns, and he believes high fees for simple strategies are unsustainable.

This theme positions Asness as a market rationalist and a consumer advocate within the investment industry, using his platform to challenge products that he believes exploit investor biases for the benefit of intermediaries.

▶Advocacy for Quantitative and Factor-Based InvestingApr 2026

A core theme is Asness's belief in a systematic, quantitative approach to investing. He champions factors like value and trend-following, arguing they have positive long-term expected returns and can even explain the success of famous discretionary investors like Warren Buffett.

Asness's focus on quantitative factors serves to demystify investment 'alpha,' suggesting that much of what is perceived as unique skill can be replicated through disciplined, evidence-based strategies, thereby challenging the premium charged by traditional active managers.

▶Sober Assessment of Market Valuations and Future ReturnsApr 2026

Asness consistently maintains that U.S. stock market valuations are high by historical standards, even after recent downturns. He argues that the U.S. market's past outperformance was driven by multiple expansion, a phenomenon he believes is naive to expect to repeat from current, more expensive starting valuations.

This perspective suggests investors should temper their return expectations for U.S. equities and consider global diversification, as the tailwind of expanding valuation multiples has likely dissipated.

▶Analysis of Macroeconomic Environment and Market RegimesApr 2026

Asness analyzes the current economic landscape, noting slowing growth and persistent inflation, and speculates on Federal Reserve actions. He contrasts the current environment with the post-GFC decade of low rates and volatility, which he considers to have been the more abnormal period.

His macro analysis indicates a belief that markets are returning to a more historically 'normal' state of higher volatility and uncertainty, requiring more robust and diversified portfolio construction strategies like trend-following.

Source episodes

Sentiment over time

Not enough data for timeline

Changes over time

Pre-AQR

As part of the Strategic Partnerships group at Goldman Sachs, Asness and his team outperformed peers by 5% annually for several years [5].

AQR Peak

AQR Capital Management's assets under management reached a peak of approximately $200 billion [16].

Post-GFC Decade

Asness identifies the 10 years following the Global Financial Crisis as an 'abnormal' period of unusually low interest rates and low volatility [4].

Late 2020

AQR's value strategy began to recover, which Asness notes occurred well before the major spike in interest rates, challenging the narrative that value's performance is solely tied to rates [15].

Present

Asness assesses the current market as having high stock valuations and historically low bond yields, with a slowing U.S. economy and inflation at the high end of the Fed's target [11, 12, 27].

Suggested prompts

How does Cliff Asness's critique of buffered funds and single-day options reflect his broader philosophy on financial innovation and investor protection? &nearr;What are the potential contradictions in Asness's view that the market is mistaken in correlating value with interest rates, given the timing of his own fund's recovery? &nearr;How has the decline in AQR's AUM from its peak likely influenced Asness's public commentary on industry fees and competition? &nearr;To what extent can AQR's quantitative explanation of Warren Buffett's success be seen as a challenge to the traditional narrative of discretionary 'genius' in active management? &nearr;

Key concepts

Buffered Funds & Options 2 ep Value Investing 2 ep AQR Capital Management 2 ep Market Valuation 2 ep Interest Rates & Fed Policy 2 ep US Equity Market 1 ep Hedge Fund Industry 1 ep Cryptocurrency 1 ep Trend-Following 1 ep Private Equity 1 ep

Notable quotes

“But the vast majority of buffered funds, when compared to a very simple, straight up mix of an index fund and cash, didn't outperform it. They underperformed it and didn't have smaller drawdowns. They had larger drawdowns.”

Cliff Asness · Billionaire Investor Cliff Asness on Managing Risk, 'Buffer' ETFs and More | WSJ’s Take On the Week

“my prediction would be two three years of above normal returns”

Cliff Asness · Cliff Asness, Founder, Managing Principal, and Chief Investment Officer of AQR Capital Management

“But expecting that to happen again from instead of starting cheaper, from starting more expensive seems very naive.”

Cliff Asness · Billionaire Investor Cliff Asness on Managing Risk, 'Buffer' ETFs and More | WSJ’s Take On the Week

“over the last five to seven years the value trade has been very correlated to interest rates and I actually think that's probably a mistake”

Cliff Asness · Cliff Asness, Founder, Managing Principal, and Chief Investment Officer of AQR Capital Management

Report last updated: Apr 21, 2026

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