Overview

For individuals and their families, wealth compounds after tax. AQR believes that investors have a better chance of meeting their goals when their asset managers take taxes into account. We call this being “tax-aware.”



Source: AQR. All figures are approximate as of 3/31/2024; AUM includes assets managed by AQR and its advisory affiliates.  

1. The ~$5.2 billion represents assets invested by our clients (as compared to Regulatory Assets Under Management reported in the Form ADV, which includes the gross market value of all long and short positions in a long-short portfolio).

2. The ~$5.2 billion represents assets invested by our clients in long/short tax-aware private commingled vehicles and separately managed accounts.  We also manage ~$7.5 billion in tax aware investments in mutual funds and long-only strategies in separately managed accounts.

 

New Ways To Compound Wealth

AQR's tax-aware strategies go a step beyond solutions that have long been used by taxable investors.

Tax-Aware Equities

AQR Flex Separately Managed Accounts (Flex SMAs) are diversified equity portfolios designed to help investors build, diversify, and preserve wealth.  

Traditional long-only tax-loss harvesting strategies, like direct indexing, generally realize tax benefits during early years of investment or in falling equity markets. AQR Flex SMAs seek to generate excess returns and tax benefits that are potentially larger and longer lived. Unlike conventional equity strategies, we employ long and short positions, allowing us to unlock more opportunities to realize losses. 

Investors may use these strategies in an attempt to: 

  • Add alpha and gain control over highly appreciated portfolios

  • Diversify concentrated asset holdings

  • Amplify charitable giving 
Tax-Aware Alternatives

AQR Tax-Aware Alternatives seek to eliminate the typical tax burden of hedge fund strategies. 


By combining alternative strategies with tax-aware implementation, our solutions allow investors to access diversifying strategies in a more tax efficient way. In some cases, tax aware alternatives may even help lower an investor’s overall taxes. We manage a range of investment strategies, including long/short equity, market neutral, trend following, and multi-strategy offerings. 


Investors may use these strategies in an attempt to: 

  • Reduce exposure to equity market risk 

  • Capture additional sources of return 

  • Complement existing alternatives allocations  

Investment Approach

Systematic
Emphasizes research and precision throughout the investment process and allows us to be transparent with our investors
Diversified
Helps us manage risk and build higher-conviction portfolios by applying our investment philosophy broadly and without bias
Long/Short
Allows our portfolios to take advantage of both positive and negative views, and to potentially further improve investor after-tax outcomes

With an approach rooted in academic exploration, we are committed to ongoing education and continued innovation. We regularly publish research and insights in our Tax-Aware Learning Center.  

Tax Matters Blog
Tax-Aware Further Reading

This document has been provided to you solely for information purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. The factual information set forth herein has been obtained or derived from sources believed by the author and AQR Capital Management, LLC (“AQR”) to be reliable but it is not necessarily all-inclusive and is not guaranteed as to its accuracy and is not to be regarded as a representation or warranty, express or implied, as to the information’s accuracy or completeness, nor should the attached information serve as the basis of any investment decision. This document is intended exclusively for the use of the person to whom it has been delivered by AQR, and it is not to be reproduced or redistributed to any other person. The information set forth herein has been provided to you as secondary information and should not be the primary source for any investment or allocation decision. Past performance is not a guarantee of future performance. 

This material is not research and should not be treated as research. 
 
This material is intended for informational purposes only and should not be construed as legal or tax advice, nor is it intended to replace the advice of a qualified attorney or tax advisor. This material is not intended to be marketing. The recipient should conduct his or her own analysis and consult with professional advisors prior to making any investment decisions.

Risks of Tax Aware Strategies

Like any investment strategy designed to generate pre-tax returns, tax-aware investment strategies are subject to the risk of  pre-tax returns meaningfully underperforming expectations.

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