Renaissance fund in first loss for 20 years

Date: Tuesday, January 15, 2008
Author: Deborah Brewster, Financial Times

Renaissance Technologies, one of the best-known and best-performing hedge fund groups in the world, has recorded its first fund loss in almost 20 years.

Renaissance’s Institutional Equities fund, which it launched in 2005 and designed to hold up to $100bn, lost 1 per cent of its value in 2007, according to investors.

Renaissance, founded by Jim Simons, a former mathematics professor, is one of the most respected names in the hedge fund world.

Its first main fund, Medallion, has returned an average of more than 30 per cent a year, using quantitative computer-driven trading strategies.

However, Medallion manages money only for Mr Simons and Renaissance employees, and has been closed to outside investors for several years.

The loss for the Insitutional Equities fund, although minor, symbolises one of the rockiest years for hedge funds since the emerging markets crisis of 1998.

The average hedge fund return last year was 10 per cent, according to Hedge Fund Research. That is in line with the long-term average annual return, but individual funds tended to do either very well or very badly, with considerable volatility in returns.

However, the patchy returns do not appear to have deterred investors. In spite of big withdrawals from poorly performing funds, investors collectively put $164bn in new money into hedge funds in the nine months to September 2007, according to Hedge Fund Research.

The Institutional Equities fund has managed to return an average of 9.7 per cent a year since its inception. However, investors pulled several billion dollars from the fund last year.

The fund at the end of last year managed about $25bn.