Secretive hedge fund Renaissance Technologies' reportedly sees $15 billion in outflows despite double digit performance
AP Images / Jason Decrow
- Renaissance Technologies has seen almost $15 billion in outflows over the past 14 months, according to a Bloomberg report.
- The investors' redemptions come even as the hedge fund delivered double-digit returns for its three public funds in 2021.
- The outflows initially started in 2020 after Renaissance's funds delivered negative returns.
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Renaissance Technologies double-digit returns in 2021 weren't enough to prevent the nearly $15 billion in outflows it experienced over the past 14 months, according to a Bloomberg report.
The quant-focused hedge fund, founded by Jim Simons and Howard Morgan in 1982, has turned into a more than $100 billion behemoth over the years thanks to the consistently jaw-dropping performance of its Medallion fund, which is only open to current and former employees of the company.
The allure of Renaissance's Medallion fund has helped drive investors to the three hedge fund strategies it makes available to the public. But the diverging returns between the private and public funds has led to consistent outflows over the past year.
Renaissance is still reeling from one of its worst periods on record in 2020. The quant hedge fund's models were thrown off by the COVID-19 pandemic, which led to subpar performance for all three of its public funds available to investors.
Renaissance's RIEF, RIDA, and RIDGE funds returned a negative 19%, 31%, and 31% in 2020, while the hedge fund's Medallion strategy generated positive returns of 76% over the same time period. That discrepancy seemed to have woken investors up to the fact that the strategy employed by Renaissance's Medallion fund is not even close to that of its three public funds.
Renaissance has always told its investors that its public funds employ a different trading strategy than its private Medallion fund, but not all clients believed them, according to comments to Bloomberg from former Renaissance executive Nick Patterson.
"After the very bad results in 2020, I think a lot of people realized, 'Oh, when they said the fund wasn't Medallion, it's true,'" Patterson told Bloomberg.
And a rebound in performance in 2021 has not been enough to stem the outflows. Renaissance's RIEF, RIDA, and RIDGE funds returned a positive 20%, 15%, and 10% in 2021, according to Bloomberg.
While those returns weren't enough to recoup losses from 2020, they did outperform the HFRI hedge fund benchmark's return of 7.5% in 2021. Meanwhile, the S&P 500 gained about 27% last year. Altogether, Renaissance has seen losses and redemptions total about $50 billion, with most of it being internal cash, according to the report.
But the decline shouldn't be a problem for Renaissance in the long-run, according to Patterson. "As long as Medallion is doing OK, the company isn't remotely in any danger," Patterson said.