With his typical sarcastic humour, in his response to one of them, a French investor, Asness drew on his very limited French to reply: “Après moi le déluge.” It’s a line borrowed from the French King Louis XV, meaning: ‘After me the flood’, and is an elegant way of saying ‘I don’t care’. (Also, since the French Revolution began 15 years after the king’s death, it has been interpreted as a portentous expression). Obviously Asness was speaking in jest, and was not providing a real insight into AQR’s succession policy. “I have an ego and I think I’ve come up with good ideas over time. But there’s nothing that’s uniquely one person’s idea at AQR. The structure is very flat and we bounce things off each other.” In a strong vote of confidence, he would happily invest with AQR – “in the same products with the same guys” – if he was not at the firm. “I absolutely would. Because I know how little I matter. But no-one else might know.”
The concept of hedge fund beta, for instance, although often attributed to Asness, was inspired by Mitchell and Pulvino’s research into the parallels among merger and convertible arbitrage strategies, and the implementation these concepts was the usual collaboration among AQR’s partners. “I might have been a big part of these ideas, but there is literally zero that is attributable to me. I wish that weren’t the case!” The firm’s investment philosophy, the breadth of strategies it runs and its overall business model were clearly inspired by Asness, and continue to be. Its research team includes top academics and practitioners, and the depth of talent in the organisation, plus the fact it now has 14 partners, means that succession in well in-hand.
The real threat to AQR, Asness says, is an unlucky break. “Even an absolutely correct strategy can have multiple years in which it’s wrong. There is no-one who isn’t susceptible to a real bad luck streak that really strains their business.” So far, however, AQR’s “net luck” has been good, and the partners have worked hard at building a successful business. In a key measure of progress, Asness no longer finds it necessary to explain the flagship absolute return fund’s early underperformance during the tech bubble. And although he has achieved “some level” of notoriety and personal wealth, it doesn’t mean he’s relaxing. “At what point in your life are you satisfied? People who are driven to create something like this are often wired to be about the process, about the building, about the achievement. I love trying to beat the market. I want to prove that we can create something that’s really long-lasting, that we’re right about things and – maybe we’re not there yet – but something that can survive me.” But at age 43, he’s not going anywhere.