Co-founder of AQR Capital Management Cliff Asness is making a comeback in his treasured value trade as the firm’s $1 billion Absolute Return fund posted its five best days in its entire 23-year life at the start of 2022 with a 10% gain. Still, Asness tells Bloomberg in an interview that “it’s too early to gloat.”

AQR’s Equity Market Neutral Fund is still down 14% on a 5-year basis, even after starting 2022 with an 8% surge. And with so many investors snapping up tech stocks, the quant firm now manages about $124 billion – down from $220 billion in late 2018. But now, as yields rise, inflation remains persistent, and the economy recovers, there’s credence in the strategy of buying cheap stocks and selling off their expensive counterparts, and that’s a strategy the firm is well-known for.

While value often has short-lived rebounds after a crisis, Asness believes the market is finally catching up to his belief that the value trade is worthwhile. But value only really started recovering in late 2020 in the wake of the Covid vaccine announcements, and it’s been a rocky road since then, with much of that rebound faltering last summer. Bonds appear to be the catalyst for the rebound, as Treasuries record the worst sell-off in 11 months and everyone prepares for the Fed to raise interest rates at a quicker pace than originally expected to combat inflation.

Asness told Bloomberg that he believes value is likely sensitive to bond swings, at least in the short-term. Bonds would need a major rally to change the picture, but Asness is still advocating for value; yields would have to plummet 300 basis points to dim their one-year outlook on it, given the current valuation spreads. “We think it’s firing on all cylinders now,” he said. “The fundamentals are right, the price momentum is right and the valuation spreads are still, ignoring the prior six months, at records.”