The Renaissance Suffered 5 Billion Redemptions

Renaissance Fund cannot be spared. In the latest news, the Renaissance Fund has performed poorly in 2020 and early 2021 due to its inability to cope with abnormal fluctuations, and continues to encounter huge redemptions.

According to HSBC hedge fund performance tracking data, Renaissance’s public funds REF and RIDA performed poorly in 2020, with returns falling 20% ​​and 32%, respectively, while Renaissance Institutional Diversified Global Equity Fund (RIDGE) fell 31% . It is reported that the reason for the loss is the famous quantitative trading of Renaissance Technology, which is helpless by the violent fluctuations that have never been seen or experienced.

The Renaissance Fund manages approximately US$60 billion in assets and is the world’s largest quantitative fund. Unfortunately, not only did the Renaissance Fund perform a terribly poor performance in 2020, but its returns could not be better than retail investors outperforming the index, and it did not have good luck in 2021.

Data shows that in January 2021, the Renaissance Fund was well-known in the ranking of the worst hedge fund performance. And the hedge fund Senvest, which also underperformed in 2020, became the best-performing hedge fund because it made a huge profit of $700 million in long GME transactions.

After the Renaissance Fund announced the worst return ever for its public fund, it was redeemed at least $5 billion.

According to reports, in December last year, customers of three hedge funds (Krief Group, RIDA, and RIDGE) redeemed a total of US$1.85 billion. In January of this year, these three hedge funds were redeemed at least $1.9 billion. In February of this year, the planned redemption was $1.65 billion.

The analysis believes that even if funds flow into these hedge funds in February, or investors decide to withdraw the redemption, the redemption trend may be delayed. But after the dismal performance of hedge funds was announced, huge redemptions were inevitable.

But now, people’s focus on Renaissance Fund is not the poor performance of its public funds, but the huge difference in performance between its private funds and mutual funds.

Of course, to Jim Simons, the founder of RenTec, the rate of return and redemption of public funds under the Renaissance are irrelevant, because these are just public funds that are a convenient hedging tool, but in the grand plan, They are trivial. The soul of the Renaissance Fund is Medallion, an iconic fund reserved for employees and insiders; Institutional Investor believes that the fund’s yield in 2020 has soared by 76%.

This difference between internally managed funds and capital operating for external investors is truly unprecedented.

The BlueCrest fund managed by Michael Platt has adopted an approach that puts the best traders into top trading when managing its own funds. Not only that, it will effectively lead customers! Then, when it comes to managing customer funds, BlueCrest basically uses a simple imitation algorithm to imitate its top-level transactions, but only after the management team is in place, so that it has enough firepower to generate alpha, just let Billions of money flowed into the same transactions it had already made, creating a feedback loop.

Has the Renaissance Fund done this so that its flagship fund, Medallion, has the advantage? Media commented that “it should not be.”

In September last year, the Renaissance Fund informed its clients that the loss was due to insufficient hedging during the March crash and excessive hedging after the market rebounded. At the time, the fund said, “Although the recent performance has been very bad, worse than the previous performance, it is expected that this will happen again in 2020.

The model shows that in this historical record, some risk-reward ratios are as bad as those seen now, which is not shocking. People should understand that even good investments can perform terribly bad from time to time. “