Style Premia Investing

Financial markets have exhibited persistent patterns for decades. Researchers have documented many of these patterns across markets, asset classes, and time periods, and investors commonly refer to them as style premia.

These patterns may arise from investor behavior, risk preferences, and institutional constraints, creating opportunities that disciplined investors may seek to capture over long investment horizons. Four of the most widely researched styles include:

  • Value: Seeking assets that appear inexpensive relative to their fundamentals.
  • Momentum: Seeking assets with improving trends while avoiding those with deteriorating trends.
  • Carry: Seeking assets that offer relatively attractive income or yields compared to similar investments.
  • Defensive: Seeking assets with characteristics that have historically delivered more attractive risk-adjusted outcomes.

While each style may experience extended periods of underperformance, combining multiple styles into a single portfolio may provide a more diversified source of return across market environments.

 

Why Invest in Style Premia?

Unlike traditional stock and bond investing, style premia strategies typically use long and short positions to isolate specific investment styles. This allows managers to express investment views on both attractive and unattractive assets while reducing reliance on the overall direction of markets. Potential benefits include:

  • Multiple potential sources of return
  • Diversification across styles, asset classes, and global markets
  • Lower dependence on broad equity and bond market movements
  • A transparent, rules-based investment process

Like all investments, style premia strategies can experience periods of losses, and there is no guarantee they will achieve their investment objectives. Many investors view them as long-term portfolio diversifiers rather than short-term performance strategies.

 

Style Premia at AQR

At AQR, we seek to enhance well-established investment concepts by refining how they are measured, extending them across global asset classes, and combining them into diversified portfolios through disciplined portfolio construction and risk management.

Our research team continually evaluates new academic insights, data sources, and implementation techniques to improve how style premia are measured, combined, and managed over time.

Resources

Related Funds

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

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

Investment in any of the funds described on this website carries substantial risk, including the possible loss of principal. There is no guarantee that the investment objectives of the funds will be achieved and returns may vary significantly over time. Investment in the funds described on this website is not suitable for all investors. Not all funds or share classes are available to all investors.

Fund offering documents contain risk warnings that are specific to each fund. Investors should only invest in a fund once they have thoroughly reviewed the prospectus and Key Investor Information Document (“KIID”) for the fund and carefully considered the relevant investment objectives, risks, charges and fees. Investors may wish to consult an independent financial advisor for personal and specific investment advice before investing.

This document is a marketing document 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 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”).

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.