AQR Bets on Machine Learning as Asness Becomes AI Believer (1)

Cliff Asness, Wall Street’s standard bearer of traditional quant finance, was once skeptical that machine learning would ever make a big splash at AQR Capital Management.

Yet seven years after the AQR co-founder issued his words of caution on the technology’s potential, it’s a very different story. The firm is raising external capital for two machine-learning strategies, and this subset of artificial intelligence now powers about a fifth of the trading signals in its flagship multi-strategy fund.

That’s quite the turnaround. Asness has built up his $128 billion powerhouse by riding classic rules-based methods for picking securities like ...