Feb. 22 (Bloomberg) -- AQR Capital Management LLC's largest hedge fund fell almost 15 percent this year through Feb. 15 as market swings tripped up computer models the managers use to make trades, two people with knowledge of the matter said.

The assets of AQR's Absolute Return fund dropped to $2.9 billion last month from $4 billion in the fourth quarter, said the people, who declined to be identified because the Greenwich, Connecticut-based firm doesn't publicly disclose the data. AQR's smaller Asset Allocation fund lost at least 16 percent of value.

Quantitative managers who rely on computers to make trades have struggled as global equity markets declined. Assets managed by AQR, co-founded in 1998 by former Goldman Sachs Group Inc. managing director Clifford Asness, slipped more than 20 percent to $8.6 billion in the past six months because of investment losses and client redemptions.

``Quants traditionally do well when the market moves in broad strokes, and during choppy markets, their practices suffer,'' said Geoffrey Bobroff, an independent investment consultant in East Greenwich, Rhode Island, who isn't affiliated with AQR.

Brian Maddox, an AQR spokesman, declined to comment.

Quant funds run by AQR, Goldman and JPMorgan Chase & Co.'s Highbridge Capital Management LLC stumbled in July and August when credit markets seized up and managers rushed to raise cash by selling stocks. Goldman and Highbridge are based in New York.

Zwirn to Liquidate

Meanwhile, D.B. Zwirn & Co. has been hobbled by disclosures of improper accounting and will liquidate its two largest hedge funds after clients asked to withdraw more than $2 billion.

The New York-based firm will shut the domestic and offshore versions of the Special Opportunities Fund after its 2006 financial audit was delayed, leading to ``a large number of investor redemptions,'' according to a letter sent yesterday to clients. The funds have about $4 billion in assets, 80 percent of the firm's total.

Losses accelerated in January as managers who concentrate on picking stocks lost an average of 4.1 percent, the biggest monthly decline in more than seven years, according to data compiled by Chicago-based Hedge Fund Research Inc. The Standard & Poor's 500 Index closed up or down more than 1 percent in 14 of 21 trading days in January. That occurred just once in January 2007.

Highbridge, Goldman

AQR offers two versions of the Asset Allocation fund. The first, managed to limit swings in value, lost 16 percent through Feb. 15. The second, which takes more risk, fell 25 percent.

Quant funds managed by Goldman Sachs and Highbridge have improved their performance this year. Goldman's Global Alpha, once the firm's biggest hedge fund, gained 1.6 percent in January, according to an investor. That followed a 40 percent decline in 2007 -- a loss of about $4 billion not counting client withdrawals -- as bets on currencies, stocks and bonds went wrong, according to an investor report.

Highbridge's Statistical Opportunities fund, a $1.5 billion stock fund that lost 14 percent in 2007, has gained about 6 percent this year, according to an investor. Spokeswomen for Goldman and Highbridge declined to comment.

One of AQR's Global Stock Selection funds with less than $1 billion in assets has gained about 10 percent this year, according to an investor.

Affiliated Managers

The company, which is partially owned by Affiliated Managers Group Inc. of Beverly, Massachusetts, manages about $35 billion in assets across all of its funds, according to its Web site. That includes funds that bet solely on rising stock prices. The firm, which Asness started with David Kabiller, Robert Krail and John Liew, considered going public last year, the Financial Times reported.

AMG, which owns stakes in more than two dozen money managers, fell $5.71, or 5.8 percent, to $92.80 at 4:15 p.m. in New York Stock Exchange composite trading. Shares of the Beverly, Massachusetts-based company have dropped 21 percent this year, compared with the 7.7 percent decline by the Russell 1000 Index.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested.

To contact the reporter on this story: Jenny Strasburg in New York at jstrasburg@bloomberg.net

Last Updated: February 22, 2008 16:22 EST