U.S.-based quant hedge fund AQR Capital Management announced on Monday that it is donating more than $15 million to the London Business School. The money will be spread out over 10 years, and is earmarked to support research and academic prizes, as well as fund an annual conference.
The donation will also lead to the creation of the AQR Institute of Asset Management, which highlights the importance of keeping up with academic research to gain an edge in the highly competitive quantitative fund industry.
What can past market crashes teach us about the current one?
AQR institute to have broad focus
Ralph Koijen, a professor of finance at the London Business School and the new director of the institute, said research would focus on the intersection of finance, economics and accounting. Initial projects will investigate active fund management, the market impact of portfolio construction and retirement savings in an aging society.
“It will not be just focused on quant research,” he noted.
The AQR institute will try to link academic research to real-world practices. Sir Andrew Likierman, dean of LBS, said AQR would not determine the research agenda. “The institute depends for its credibility on its independence,” he highlighted.
Man Group already established quant research institute at Oxford
Of note, AQR’s sponsorship of an institute at LBS is the second major deal by a hedge fund with a British university. Man Group linked up with Oxford in 2007, donating $20 million to establish a quantitative research insititute.
Man Group located some of its own researchers at the Oxford institute to encourage research in specific areas, but AQR has no say in how the London institute is run. That said, Cliff Asness, a co-founder of AQR, commented he hoped the new institute would provide “access to talented people” both for recruitment and joint research.
AQR trying to raise European profile
AQR has been trying to raise its European profile since it opened a London office three years ago. More than 80% of AQR’s AUM is based in the U.S., and the firm had more money under management from Australia than Europe in 2914. Current assets under management total close to $123 billion.