Renaissance Hit With $5 Billion in Redemptions Since Dec. 1. The Algorithms went out of whack
(Bloomberg) -- Renaissance Technologies, the investing giant that just posted its worst-ever returns across its public funds, has been hit with at least $5 billion in redemptions.
Clients pulled a net $1.85 billion across the three hedge funds in December and requested a net $1.9 billion back in January, according to investor letters seen by Bloomberg. Investors are poised to yank another $1.65 billion this month, the letters show.
Those figures could be offset if there are any inflows in February or if investors decided to walk back any of their redemption requests.
Billionaire Jim Simons’s firm, a quant-investing pioneer, is coming off a rough year. Its three public hedge funds posted double-digit losses in 2020 as their algorithms were thrown out of whack by market swings the computers had never seen before. At the same time, its fund for employees and insiders soared 76% last year, Institutional Investor reported.
Renaissance’s Institutional Equities fund, the biggest of the external vehicles, lost 19% in 2020, the letters show. That fund got the biggest chunk of the redemptions. The Institutional Diversified Alpha fund dropped 32% and the Institutional Diversified Global Equities fund fell 31%.
A spokesman for the East Setauket, New York-based firm declined to comment.
Renaissance told clients in a September letter that its losses were due to being under-hedged during March’s collapse and then over-hedged in the rebound from April through June. That happened because its trading models “overcompensated” for the original trouble.
Renaissance again addressed its dismal numbers in a December letter.
“Although recent performance has been terrible and worse than prior performance would have suggested was likely for 2020,” the firm said, its model “anticipates that in track records as long as ours, some risk-return ratios every bit as bad as the ones we are now seeing are not shocking.” The broader lesson is that “one should expect even good investments to perform horribly from time to time.”Renaissance is the world’s largest quantitative hedge fund firm. It was founded in 1982 by Simons, a former codebreaker for the National Security Agency. Last month, he announced that he’s stepping down as chairman of the firm, which managed about $60 billion at the time. He will remain a board member.
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