A Tax Strategy So Aggressive It Built the World’s Largest Hedge Fund and Made Losing Money the Hottest Product on Wall Street

In 1993, a Goldman Sachs employee named Cliff Asness read an article that highlighted how taxes could often surpass market gains. This insight led Asness to build a hedge fund, AQR Capital Management, which grew to become the world's largest with a valuation of $140 billion by the end of 2025. AQR's unique strategy, known as the Flex strategy, turns a $100 million investment into over $580 million in tax-offsetting losses over 10 years using short selling and leverage.

This aggressive approach has attracted significant assets, but regulators and financial institutions are now raising concerns about its potential tax implications.