Quantitative fund manager AJO Partners, which manages $10 billion, said on Wednesday it will shut at the end of the year after “lingering viability concerns” from its clients.
Performance data on the fund's website showed a number of its funds were down sharply for the year to Sept. 30, with its Large Cap Absolute Value strategy, which has more than $5 billion, down 15% and Small Cap Absolute Value down 21%.
“Our relative performance has suffered because our investment edge, our “secret sauce,” is at odds with many forces driving the market,” founder Ted Aronson said in a memo provided by a company representative to Reuters.
“However, the drought in value — the longest on record — is at the heart of our challenge.”
Aronson wrote the length and the severity of the headwinds “have led to lingering viability concerns among clients, consultants, and employees.”
Value stocks or shares of economically sensitive companies have been among the laggards in the market’s rally from its lows in March. Related sectors such as retail have struggled as their business models get disrupted in a shift to a more tech-driven world.
The Russell 1000 Value index is down 8% year-to-date, while the Russell 1000 Growth index has gained 30%.
AJO, which has offices in Philadelphia and Boston, will stop trading on Nov. 30 and wind down its business on Dec. 31. Aronson said that the closure would mark the end of his career.
“Our decision to close is in response to market forces. We still believe there is a future for value investing; sadly, the future is unlikely to arrive fast enough - for us,” he wrote in the memo.
The closure of the fund was earlier reported by Bloomberg and the Financial Times.
Reporting by Megan Davies in New York; Additional reporting by Kanishka Singh and Sabahatjahan Contractor in Bengaluru; Editing by Devika Syamnath and Arun Koyyur