I came across a post talking about AQR’s AQMIX underperformance.
So I went to look it up myself so AQR’s AQMIX has returned 2.78% over five years.
Given the rising markets from 2009, this number does not look good.
However, let us remember three things.
First, AQMIX is a managed future fund has a diversification value.
Second, even the best strategies underperform for some time. Meb Faber, a hedge fund manager, points out that many great strategies have periods of underperformance. Even Buffett had periods of drawdowns. So let us go for the long haul as long as the investment thesis is solid.
Third, AQR is filled with very smart people. Their papers are quite interesting and makes you think about your investing. So I have some faith in AQR. Of course, LTCM failed despite all the brain power. However, I do believe Cliff Asness knows the downfall of LTCM and will manage AQR’s risk.
In sum, let us remember that even the best strategies have periods of underperformance and that we should be disciplined and patient as long as the investment thesis is sound.