Renaissance Technologies 66% Average Returns Since 1988

[hodedofome]

Too bad we can’t be investors in their fund. It was started by Jim Simons who is a famous math whiz. He was just as good at finding and hiring math talent as he was at doing math himself. He’s now worth like $20 billion. Annual returns are attached.

For those who say it’s impossible to beat the market, here is exhibit A.

[Recliner]

That's great, and I'm happy for him. There's absolutely zero chance of me putting any money in a fund with a 5% fee. It's easy to use hindsight to look back and find the winner. How many flamed out in that same time period? A 2% chance of beating the market long term does not appeal to me.

[Buffaloski Boris]

That's great, and I'm happy for him. There's absolutely zero chance of me putting any money in a fund with a 5% fee. It's easy to use hindsight to look back and find the winner. How many flamed out in that same time period? A 2% chance of beating the market long term does not appeal to me.

IIRC the fee on the fund was 5 and 40 when it accepted investors. And I would be delighted to pay it. Call me Jim Simonds!

Fees are fine so long as you get value. Problem is, you usually don’t.

[hodedofome]

I would mortgage my house and sell one of my kids if they offered me to buy into the fund.

[Maenad]

When Jakob Lund Fisker of ERE was working as a quant he knew some guys who were able to beat the market reliably. There are a few people who can do it, absolutely. The practical reality lies in correctly answering the following questions:

1. How do you determine what someone's returns actually were? [avoiding Bernie Madoff]
2. Of those with great returns, how do you determine the difference between the talented ones and the merely lucky?
3. Of the talented ones with great returns, are you able to invest with them? [usually they do not work with us mere mortals]

The difficulty in those 3 questions is what drives most of us to say "don't try to beat the market". The sharks are out there doing that, you and I are just the lampreys. I'd rather hitch a ride on a shark than try to swim with them.

[MustacheAndaHalf]

Who audits the Renaissance numbers?
Meaning, which company other than Renaissance can vouch for their performance?

[hodedofome]

Who audits the Renaissance numbers?
Meaning, which company other than Renaissance can vouch for their performance?

For like 10-15 years they had outside investors and returned most or all their profits every year so that the fund wouldn't get too large. Then they returned all the outside investors money in the mid 2000s so that they could keep the future profits for themselves. Simons went from nothing to being worth $20 billion, and all the other partners and scientists who have been there a while are fantastically wealthy. So, they are printing money there, and it's nothing like Madoff because they've paid out way more than they've taken in from outside investors.

They opened up a different fund that could manage up to $100 billion but doesn't have near the returns that the original fund has. That fund does manage $100 billion these days, but the returns aren't as good. The crazy performance of their original fund is partly so good because they cap the size of the fund at $10 billion. They've said managing more money than that would hurt performance.

I'm sure you could speak to plenty of other hedge funds who could vouch for their performance and would kill for their source code. As far as who their auditor is, I don't know.