AQR market views, organized for advisors.

Tax-aware long-short (TA LS) strategies are fundamentally different from direct indexing.

Direct indexing aims to track a benchmark tax-efficiently, replacing sold positions with close substitutes.

Inflation uncertainty is the key takeaway, despite falling rates since 2022.

Equity markets seem unbothered, but bonds are showing concern.

The core argument is that AI's rise necessitates a renewed focus on human creativity and emotional intelligence as durable competitive advantages in fields like quantitative investing.

While AI excels at automating analytical and technical tasks, it cannot replicate these uniquely...

Tax-aware long-short strategies can provide liquidity without forcing full portfolio liquidation and tax realization.

This means investors can access cash while preserving accumulated tax benefits.

The core takeaway is that popular carbon metrics like footprint and intensity can be misleading for tracking real decarbonization progress.

These metrics can improve solely due to rising market valuations, not necessarily because companies are cutting emissions.