AQR Fusion: Combining Long/Short Alternatives with Equity Market Exposure

“Fusion” blends long/short alternative strategies with full equity market exposure, within a single, capital-efficient investment vehicle. This hybrid investment approach allows investors to stay invested in core equities while adding uncorrelated return streams through long/short alternatives. The result? A portfolio that allows investors to consume the benefits of diversification as higher expected total returns, rather than just higher risk-adjusted returns.

Potential Benefits of Fusion

  • More efficient alpha than traditional active equity: Compared to traditional active equity approaches, Fusion has a more efficient, less constrained alpha strategy that can make fuller use of active views. The ability to go short is particularly important amid concentrated markets, when many stocks have tiny weights in the benchmark index.
  • More capital-efficient than long/short alternatives: Historically, investors allocating to uncorrelated alternatives often had to reduce their core stock or bond allocations, incurring tracking error versus peer portfolios and making it harder to outperform when markets rise. Fusion solves this “funding problem” by overlaying full beta-1 equity exposure on long/short strategies—allowing investors to maintain full equity market participation while adding uncorrelated return sources in a single, capital efficient vehicle.

How Fusion Addresses the “Funding Problem”

Key Risks and Considerations

  • Long/short strategies: Long/short alternative strategies rely on active investment views. If investment decisions do not perform as expected, the strategy may experience losses or higher volatility.
  • Derivatives and overlay: Derivative instruments used to obtain equity market exposure may not perform as intended, and may amplify volatility, counterparty risk, or losses during periods of market stress.

Resources

Related Funds

This product is based overseas and is not subject to UK sustainable investment labelling and disclosure requirements.

Diversification does not eliminate the risk of experiencing investment losses.

There can be no assurance that any investment strategy will be successful.

The information contained on this website is for informational purposes only and does not constitute an offer or invitation to buy, sell or otherwise transact in any security. The information on this site is directed only at persons or entities in any jurisdiction or country where such access to information contained on this website and use of such information is not contrary to local law or regulation. Accordingly, all persons who access this website are required to inform themselves of and to comply with any such restrictions. The prospectus, KIID and the latest periodic reports for each fund are available free of charge.

Past performance does not predict future returns.

This is a marketing communication in the European Economic Area (“EEA”) and approved as a Financial Promotion in the United Kingdom (“UK”). It is only intended for Professional Clients.

Information for clients in the EEA
AQR in the European Economic Area is AQR Capital Management (Germany) GmbH, a German limited liability company (Gesellschaft mit beschränkter Haftung; “GmbH”), with registered offices at Maximilianstrasse 13, 80539 Munich, authorized and regulated by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, „BaFin“), with offices at Marie-Curie-Str. 24-28, 60439, Frankfurt am Main und Graurheindorfer Str. 108, 53117 Bonn, to provide the services of investment advice (Anlageberatung) and investment broking (Anlagevermittlung) pursuant to the German Securities Institutions Act (Wertpapierinstitutsgesetz; “WpIG”). The Complaint  Handling Procedure for clients and prospective clients of AQR in the European Economic Area can be found here: https://ucits.aqr.com/Legal-and-Regulatory.

Information for clients in the United Kingdom
The information set forth herein has been prepared and issued by AQR Capital Management (Europe) LLP,  a UK limited liability partnership with its office at 15 Bedford Street, London, WC2E 9HE, which is authorised and regulated by the UK Financial Conduct Authority (“FCA”).