AQR FLEX LONG/SHORT TAX AWARE Investing
AQR (Applied Quantitative Research), is the leading quantitative fund family behind a ton of factor-based investing) launched Flex as a "separately managed account" (SMA) in 2021, but the ideas go back to their research from 2011.
The minimum investment for AQR Flex SMA is $1,000,000 or $1mm.
Glover Park Wealth Management, LLC is a SEC registered investment adviser (RIA) with access to the
AQR Flex Tax-Aware SMA
and AQR TA Delphi Plus Strategy Hedge Fund. The AQR SMA and Hedge Fund strategies can only be purchased through a registered investment adviser (RIA). Charles Schwab & Co., Inc. is the third-party custodian of client assets for Glover Park Wealth Management, LLC.
Flex is a turbocharged version of direct indexing using long/short leverage via extensions. The strategy invests in individual stocks to mimic an index like the Russell 1000 or Russell 3000, but aggressively tax-loss harvests along the way.
AQR Flex takes it further by going long/short using margin leverage or portfolio margin.
This means the strategy goes long the stocks which the quantitative model believes have a favorable risk/reward and selling short the companies they believe will underperform.
The "tax-aware" part is what makes AQR one of the leading firms in this category: The SMA Flex strategy harvests losses on both the long and short sides aggressively, often generating short-term capital losses you can use to offset gains elsewhere in your portfolio or to offset capital gains from the sale of an outside asset such as a closely held business or real estate.
How does AQR Flex accomplish this? They achieve the tax alpha not from just selling losers (though shorts help with that). It's mostly from deferring gains on your winners; especially short-term ones taxed at ordinary income rates (up to 37% federal plus state).
Over time, this can create a significant amount of tax alpha, where you're compounding wealth faster with after-tax dollars.
The AQR Flex strategy SMA offer different "flavors" based on leverage:
- Flex 145: 145% long / 45% short nets to 1x market beta (tracks the index closely) with lower beta. Minimum investment is $1,000,000 or $1mm.
- Flex 200: 200% long / 100% short—more aggressive for bigger tax losses and alpha potential. Portfolio margin is required, and the minimum is $3,000,000 or $3mm.
- Flex 250: 250% long / 150% short that utilizes even higher margin leverage for max tax harvesting. The minimum investment is $3,000,000 or $3mm and portfolio margin is required at the custodian level.
- Flex 300: 300% long exposure overweighting stocks AQR's models are positive on. The other part of the portfolio is paired with a 200% leveraged short position against the stock that the AQR quant believes will underperform the market. The minimum investment is $3,000,000 or $3mm and portfolio margin is required at the custodian level.
The AQR Flex strategy is systematic, powered by AQR's 25+ years of factor models (value, momentum, quality, etc.), it's a quant-driven market strategy that was built to chase pre-tax alpha while using tax-aware portfolio harvesting.
The goal of the AQR Flex SMA strategy is to help you build or diversify after-tax wealth without the usual tax drag, especially if you have highly concentrated positions in stocks, ETF's, mutual funds and/or facing a large capital gains tax bill from the sale of your business or company stock.
Schedule a meeting with Glover Park Wealth Management, LLC today to learn more about these
advanced tax-loss harvesting strategies to reduce your income tax bill while diversifying and growing after-tax capital.
AQR Flex - Tax Aware Investing
Why use Glover Park Wealth as your RIA for the
AQR FLEX SMA?
The AQR Flex SMA is designed for high-net-worth individuals and ultra-high net worth individuals. The minimum investment is $1,000,000.
Using the AQR Flex 145 SMA strategy, the quant builds a long portfolio that's overweight on stocks their quant models believe have upside and shorts the stocks they believe are weak or have downside momentum. The leverage means for every $1,000,000 you invest; they borrow $1,450,000 to go long stocks on margin and short $450,000.
The AQR Flex strategy is designed and built to be
"market-neutral" in the overlay of an index—meaning the extra longs and shorts are designed to balance market risk while hunting after-tax alpha via Flex.
- Tax Harvesting: Shorts create natural losses when stocks rise, combined with longs, you can rack up net losses exceeding 100% of your initial capital in the first 3-5 years, while still attempting to outperform the benchmark pre-tax such as the Russell 3000 or Russell 1000.
- The Tax Deferral Strategy: Instead of realizing gains right away to create short-term income at the 37% income bracket plus net investment income tax (NIIT), The AQR Flex SMA strategy holds winners longer and offsets losses with short-side losses. This isn't just loss harvesting; it's gain postponement, which compounds the after-tax gains of the portfolio and therefore creating "tax-alpha". This is why AQR is the leader in Tax-Aware investing.
Contact us for an initial consultation for
AQR FLEX SMA Strategy
AQR Flex 145, AQR Flex 200, AQR Flex 250, AQR Flex 300
AQR FLEX Investing SMA
AQR LONG/SHORT FLEX
AQR MArket neutral Strategy
AQR FLEX SMA
At Glover Park Wealth Management, we believe that tax-aware investing is a game changer for optimizing your portfolio.
By utilizing direct indexing, we allow you to directly own individual stocks while simultaneously harvesting tax losses, minimizing your tax burden.
Alternatively, our long/short strategies enable us to capitalize on both rising and falling markets, hedging against downturns while seeking growth.
These approaches focus on preserving and enhancing your wealth, all while ensuring your investment strategy aligns with your financial goals.
Let the financial advisors at Glover Park Wealth help you navigate these advanced tax aware long/short strategies to keep more of your after-tax hard-earned money working for you!