AQR market views, organized for advisors.

Tax-aware long-short (TA LS) investing is an active strategy, not a passive one like direct indexing.

Its goal is to generate alpha before taxes, with tax management as a secondary consideration.

The primary driver of tax-aware long-short (TA LS) strategy tax benefits is gain deferral, not aggressive loss harvesting.

Extrapolating direct indexing logic leads to a misunderstanding that TA LS strategies aim for greater loss realization than tax-agnostic approaches.

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...