Hypothetical Growth of $1,000
January 1, 1990 – December 31, 2025
What Are Liquid Alternatives?
Liquid alternatives are investment strategies designed to generate returns that have historically had low correlation with traditional asset classes such as stocks and bonds. They aim to diversify portfolios and may help reduce overall portfolio risk.
Long-only equities and fixed income often form the foundation of many portfolios. However, during periods of market stress, these traditional asset classes may not offer sufficient returns. Liquid alternatives seek to provide additional sources of return that may perform differently across market environments.
Liquid alternative strategies may offer:
- Diversification: Exposure to different sources of return beyond traditional stocks and bonds.
- Risk Management: Potential to mitigate losses during equity bear markets.
- Low Correlation: Designed to perform independently of broader market trends.
- Liquidity: Unlike private alternatives, liquid alternatives offer easier access to capital.
Source: AQR, Bloomberg, Barclays, HFRI. Stocks are represented by the MSCI World Index, Bonds by the Bloomberg Barclays U.S. Aggregate Index, and Alternatives by the HFRI Fund Weighted Composite Index. The Diversified Portfolio is 50% Stocks, 30% Bonds, 20% Alternatives. The portfolios shown are intended for informational purposes and do not represent actual results of any product or strategy managed by AQR.
*Risk is defined as volatility or standard deviation, a statistical term that measures the amount of variability or dispersion around an average (A higher value indicates higher risk).
Data is presented gross of any fees, with the exception of data based on the HFRI Fund Weighted Composite Index, which is a net of fee index. Had fees for the other indices been included, performance would have been lower. Time period chosen based on the 01/01/1990 inception of the HFRI Fund Weighted Composite Index. The portfolios were rebalanced monthly. Past performance is not a guarantee of future performance. Diversification does not eliminate the risk of experiencing investment losses. Indices are unmanaged, and one cannot invest directly in an index.
AQR's Approach to Alternative Investing
90+
Alternatives-Related Research Papers and Posts
50+
Strategies Addressing a Wide Range of Investor Challenges
28 Years
Managing Liquid Alternative Strategies
AQR is a leader in alternatives, with nearly 30 years of research and experience managing alternative strategies. AQR’s investment philosophy was born in academia, and our commitment to innovation continues to shape how we design and manage portfolios throughout market cycles.
AQR invests across asset classes, markets, and geographies using hundreds of research-driven investment signals. We continually refine our strategies to help investors pursue diversification, downside risk mitigation, and capital efficiency.
Source: AQR. All figures as of 6/30/2026.
Explore Our Offering
Our liquid alternatives platform spans most traditional hedge fund strategies, and are designed to address the diverse objectives of our investors.
Approaches: Arbitrage, Equity Market Neutral, Global Macro, Long-Short Equity, Managed Futures, Multi-Strategy
Institutional Investment Vehicles: We serve institutional investors—including pension funds, defined contribution plans, insurance companies, endowments, and foundations—with a range of vehicles to suit their organization’s governance needs.
- Private Funds
- Separate Managed Accounts
- Collective Investment Trusts
- For institutional investment vehicles, please reach out to your AQR representative.
Registered Funds: We make many of our strategies accessible to individual investors through AQR-sponsored mutual funds, and offer options for investors in Europe and Australia.
Featured Insights
Diversification does not eliminate the risk of experiencing investment losses. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation.
Broad-based securities indices are unmanaged and are not subject to fees and expenses typically associated with managed accounts or investment funds. Investments cannot be made directly in an index.
The MSCI World Index is a broad global equity index that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and does not offer exposure to emerging markets.
The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency).
The HFRI Fund Weighted Composite Index is a global, equal-weighted index of over 1,500 single-manager funds that report to HFR Database. Constituent funds report monthly net of all fees performance in US Dollar and have a minimum of $50 Million under management or a twelve (12) month track record of active performance. The HFRI Fund Weighted Composite Index does not include Funds of Hedge Funds.
No representation is being made that any investment will achieve performance similar to those shown. For illustrative purposes only and not representative of a portfolio AQR currently manages.