Response to Miles Johnson
by Clifford Asness, Ph. D. AQR Capital Management, Inc.
Miles Johnson of the FT takes strong issue with an article I didnāt write but, rather, one he thinks someone like me would write (Iām sorry if thatās hard to follow but itās Milesās fault).
I wrote a fairly narrow piece pointing out that articles marveling at the 2015 compensation of the top 25 hedge fund managers (e.g., here or here) are about wealth when they purport to be about income. Thatās basically it.Ā Not a statement that wealth wasnāt important.Ā Not a defense of this wealth.Ā Ayn Rand didnāt leave the building as she never entered it.Ā I mentioned that this āmistakeā likely occurs as higher numbers sell more papers (or whatever people buy or read for free these days) than do lower numbers. I made a point of saying that this is not about the inequality debate, rather, itās just about exaggeration and imprecision. That was it.
In fact, in the email I sent when recirculating this article I wrote a year ago (sorry you missed it the first time Miles) I specifically said and meant, āThereās plenty to debate on the investing merits and the inequality issues here without simply bad, and intentionally misleading, math.ā
Nowhere in my original piece, or anywhere else, is my obtuse denial of these important issues actually detectable. Nowhere did I say that wealth wasnāt an important part of the debate.Ā Nowhere did I defend the hedge fund business model (quite the opposite, more on that below).Ā I pointed out, literally just this ā that wealth is not income, and that these now annual articles confuse this, probably intentionally. I stand by that as fact.
Actually, I have written a lot criticizing hedge funds and Iāve done it for a long time. My firm isnāt really a hedge fund by fees or majority of assets, but that is apparently too subtle for Miles (or inconveniently didnāt fit his slant) as labels are so much easier.Ā I actually say as a matter of disclosure here that my firm has likely benefited from the move to lower fees and truly hedged products and away from the traditional hedge fund model and that I have a long history of criticizing overpriced and under-hedged hedge funds.Ā In the age of Google it would not take an incredible effort of journalistic research to note my analysis and commentary going back to 2001 inĀ here,Ā here,Ā here, or maybeĀ here? Ā Ā I got yelled at by many in the hedge fund industry for it (especially the first one when I was younger and would actually listen to semi-famous people yelling at me on the phone!).Ā The hedgies didnāt want balance and accurate analysis back then any more than Miles does now.
I also wonder if Miles has such harsh words for other critics of the misrepresented top 25 managersā earnings lists like Matt Levine at Bloomberg View. Iām guessing no as despite Matt and I repeatedly overlapping on this issue Johnson couldnāt misrepresent Mattās career, history, and motivations in order to write the political screed Miles clearly wanted to pen.
Miles, some advice. Click on a few hyper-links and actually read the background pieces. Try to understand the (admittedly narrow in my original piece) point of what you read, not the point you think the person might be making based on who they are.
I 100% stand by the piece Miles criticizes and find his criticisms to be based entirely on a non-existent essay he thinks people like me would write.Ā Finally, Iām proud of my long history of balance and willingness to criticize and advocate for change in the hedge fund industry.
This post was originally published at AQR Capital
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