Last year was one of the best hedge fund in history’s best years ever. Renaissance Technologies’ Medallion Fund, which firm co-founder and piss collector Robert Mercer would probably sacrifice several toes for a larger stake in, enjoyed what appears to be its third-strongest year since inception in 2020, which is saying something for a fund that’s got an annualized return of 39.1% since 1988. But last year it did almost twice that, rising 76%.
The Renaissance Institutional Equities Fund, which launched in July of 2005, lost 22.62 percent through December 25, according to HSBC’s weekly scoreboard of hedge fund performance. A newer fund, Renaissance Institutional Diversified Alpha, fell even more: It fell 33.58 percent through the same time period, HSBC reported…. Renaissance launched RIDA in February of 2012, and 2020 was its worst year since then, the report said.
This dichotomy, endlessly pointed out and parodied, got so bad that Jim Simons & co. decided to move some of the brains behind Medallion on to these more plebeian products to narrow the gap. This has not worked. But, more to the point, it shouldn’t, according to one of the lucky few who needn’t suffer the indignities of RIEF or RIDA. Indeed, as far as he can see, they worked perfectly; it’s everything else that fucked up.
“There is nothing wrong with the models. it’s just the world is wrong.”
This is a curious opinion of a product designed to make people money, but go on.
“The unpredictable patterns of risk behavior created by the disruption of Covid and the idiosyncratic distribution of stimulus money created an unprecedented pattern of stock price movements that couldn't possibly be adapted to by quantitative strategies,” he added.
Apart from, you know, Medallion, which somehow managed to do 100,000 basis points better. But this is a fatuous comparison, this person who definitely has no ulterior motive underlying that claim.
“There is just no reason for Medallion and RIEF to be in any way correlated,” he said. “The only thing they have in common is that they are operated using the same software and have the same senior management team….”
Oh, is that all they share? Apples and oranges, then. Nothing to see here.