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A Market-Neutral Newcomer With Reasonable Fees

Despite AQR Market Neutral's short track record, investors should keep it on their radars.

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Patricia Oey: AQR Market Neutral is a relatively new fund which launched in late 2014. It is managed by AQR, which is known for its quantitative, or rules-based approach to investing.

Market-neutral is an alternative investment strategy that seeks to go long stocks that are expected to appreciate, and go short stocks that are expected to decline. The strategy is called market-neutral because it seeks to provide returns without exposure to equity markets. For example, if Wal-Mart appears to be expensive relative to Target, you could long Target because you expect it to go up, and short Wal-Mart because you expect it to go down. This type of trade allows the investor to capture the idiosyncratic movement in prices between the two companies that is not attributable to market movements.

Patricia Oey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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