Renaissance Technologies
Renaissance Technologies is the Greatest Hedge Fund of All Time.
Founded by math genius Jim Simons, it's flagship fund Medallion has an average gross return of 66.1% since 1988.
With an average net return of 39.1% after fees. Appvn
The Medallion Fund is available only to current and past employees and their families, closing to outside investors in 1993.
Since, 1988, the Medallion Fund has racked up trading profits of more than $100 billion.
Now, I mentioned a net return of 39.1% after fees: well, the fees have been greater than the usual '2 and 20' structure (which means a 2% management fee and a 20% performance fee).
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Medallion has had a 5% management fee, and from 1988 to 2001, a 20% performance fee and from 2002 until now, a 44% performance fee.
Notice in particular the return in 2007 and 2008, a time when many were completely REKT.
In 2008, a return (after these monstrous fees) of 82.4%
How’s you like the book?
None of these claims are verifiable. We only have performance numbers up to early 2000. They certainly did well up to and including '08 but since I have not seen a single data point that's independently verified.
What do you think about RenTec? What is your opinion and experiences about the quants? Are quant funds (Two Sigma, Citadel, AQR..) just a hype? Why did you choose Equity?
Why did you copy paste a post from Reddit?
Ppl on this site get some sore weiners any time Jim’s name is mentioned
What is your opinion and experiences about RenTec? Are quant funds just a hype? Looks like you are a big believer in the fundamental strategies.
More of a fundamental guy, and very skeptical of quant strategies, but that's very general. Certainly willing to listen and give empirical evidence its due.
Why are you so skeptical? Why are hedge funds using quant strategies under-performing so embarrassingly in recent years? There's been a lot of discussion about typical L/S being crowded out as more investors move towards passive investing. So, this brings the question - what strategies in the hedge fund world do you see succeeding in the future? I think quants will be successful, but what about macro, distressed, event-driven, emerging markets etc.?
It is impossible to say what strategy will be successful going forward because it isn’t about the strategy and much more about the implementation of it and the people. Let me explain a bit:
Quant strategies have become very popular recently, but “quant” is such an overloaded term and within that can mean many different things (are we talking about short term mispricing? Medium/longer term investing based on economic stats? Etc). So first you have to be careful when comparing these (to each other and the returns) and you need to understand what you are talking about.
Part of the reason it is popular is due to the idea that you are making decisions based on data, you can test these, and you are less susceptible to emotions (and key person risk with the PM). With that, as the strategy became more popular many new funds launched in the space, and many are not successful.
Investors have been successful with other strategies. And many fundamental, L/S, etc managers are using more and more data. That doesn’t mean they are “quant” but at the end of the day basically everyone makes a decision based on data and interpreting it, the more systematic places try to interpret it through models and some funds try to just do it discretionarily. Why wouldn’t L/S be successful? Yes there are ETFs, and that is fine for many investors but the top managers get paid what they do because of the amount of time, effort, and money it takes to beat markets regularly.
So why do funds underperform? Well: 1) it is very hard to beat the markets 2) you need to make sure you are comparing the returns to the right benchmarks, etc when discussing underperformance 3) for a while there were many fund launched trying to piggyback off of the success of the quant funds, etc and they weren’t prepared to trade at that level 4) the market catches up, a good idea today is ok tomorrow and probably worthless in some time 5) on the quant specific there are many basic strategies that work until they don’t (obviously) and the risk of testing these is that they work backwards looking but not forward AND they can get crushed when conditions change quickly (just try it yourself, many basic things seem to work but watch the drawdowns).
Anyway, all strategies get harder every year, if they didn’t that would mean others aren’t learning. Additionally, the world changes, so no matter what strategy you have you need to be accounting for these things, if not you’ll get crushed.
You're a sore weiner.
Don’t know why we have to focus so much on the negatives. I, for one, would work there for free for a few years if they ever let me in.
unless they slap an onerous noncompete on you.....
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