It’s a bit over a year since Renaissance Technologies’ Jim Simons troubled these pixels, which back then delivered a gentle tweak for his documented multiple breaches of New York’s Smoke Free Air Act. But, according to the Nov. 27 issue of
Pensions & Investments, Jim’s still smoking. Big time.
His Renaissance Institutional Equities Fund – announced in mid-2005, with the stunning claim that it could handle as much as $100 billion – is up to $14 billion in assets at Nov. 1, after trading began with $600 million in Aug. 2005. He’s banged a $2 billion limit on new capital each month. Oh, and the fund’s up 22.9 percent gross in the 12 months to Oct. 31, compared with the S&P 500’s 16.35 percent, with dividends, reports P&I.
(I have a pathological aversion to hedge funds' ‘gross’ performance claims, given the very material impact of fees and expenses; however he’s significantly less troubled in this case because RIEF offers several, relatively modest by hedge fund standards, fee structures.)
Among other nuggets from the article, one of the first Simons has given since his marketing efforts in the second half of 2005, include:
RIEF’s client mix is 34% institutional investors (some investing through funds of funds); 33% from wealthy families, family offices and Renaissance employees; and 33% from brokerages and private client banks…
The line of would-be RIEF investors is “extremely robust,” [Jeffrey L.] Gould [president of Renaissance Investment Mgt LLC] said. Until recently, RIM marketers concentrated on “more progressive” endowments, foundations and pension plans. Now, they are courting consultants, institutional hedge funds of funds and other pension investors.
The new focus on the more hide-bound elements of the chronically black box-averse institutional investor market probably accounts for Simons’ choice of media for the “rare interview” that covers a lot of ground, while regrettably overlooking cigarette consumption data. But, it seems at least some of those black box-averse allocators are starting to get over themselves:
“We do a good job on the monthly statements of showing position exposure and how it may affect the portfolio. But we are not telling you how we get there,” said…Gould. “In order to protect returns, we don’t show anyone what we do or don’t do. It would give people a leg up. We want them to keep doing what doesn’t work, because it lets us capture more alpha.”
Neil Brown, RIM’s director of client service, said a visit to Renaissance’s 50-acre campus on Long Island tends to make believers of many potential clients. “It all becomes more tangible when they go out to Long Island, see the technology — it’s absolutely massive — and meet the people. They see that it’s a real organization with very bright people. One consultant who visited the campus said to me after seeing the technology room: ‘There’s definitely something going on here.’”
Noted with interest I: While Renaissance staff would not discuss fees with P&I, the information – at least as it relates to RIEF’s initial offering – has been in the public domain for more than a year. As the UK-based Financial News reported in Sep. 2005:
The new fund’s fees are lower than the combination of a 2 percent management fee and 20 percent performance fee that is typical of a hedge fund. Renaissance is offering investors a choice between
- A 2 percent management fee and no performance fee;
- A 0.5 percent management fee and a performance fee of 10 percent of any positive returns
- A 0.8 percent management fee and a performance fee of 25 percent of any returns above the S&P 500 index, or
- A 0.5 percent management fee and a performance fee of 30 percent of any returns above the S&P 500.
Other well-documented REIF factoids include its $20 million minimum, and target performance of 300 bps over the S&P 500 with two-thirds of that benchmark’s volatility. Goals that it appears to have met to date, even net.
Noted with interest II: REIF’s assets have surged in recent months. While P&I reported that the fund launched with $600 million in Aug. 2005, the UK-based Financial News, which appears to have a well-informed mole, has tracked the fund’s growth somewhat more closely:
An investor in the fund said: “The new fund had raised $2.6bn by the start of December. It is up 5.4% net from August 1 through December 16. The S&P was up 3.46% over the same period.”
Renaissance closes Medallion fund to outsiders [$$]
Dec. 30 2005
Renaissance fund assets reach $8.5 billion [$$]
Aug. 24 2006
Noted with interest III: It would probably take at least one of Simons’ rocket scientists to work this out but, with a $2 billion cap on monthly investments, and assuming annual returns of, say 20 percent, how long will it take REIF to hit its $100 billion capacity? (With $14 billion in RIEF, Renaissance has about half the assets of Goldman Sachs Asset Mgt, the consensus world leader at the moment; Renaissance still runs its Medallion Fund, with its annualized 38.4 percent return for 15 years through Jun. 30, according to P&I, but only for “friends and family” money.)
Renaissance believes size does matter [$$]
$100 billion fund will require leap of faith by its investors
by Christine Williamson
Pensions & Investments Nov. 27 2006
Earlier NakedShorts coverage
Lighting up Jim Simons (+ info request)
Nov. 20 2005
Renaissance’s renaissance
Market-tamer pursuing relative returns. Say what?
by Greg Newton
MARHedge Dec. 2005
