Renaissance to launch new fund Renaissance Technologies, one of the world's biggest and best performing hedge fund groups, plans to launch a managed futures fund with a capacity of $25bn, an unusual foray into an investment strategy that has been underperforming. Renaissance was founded by former maths professor James Simons, last year the world's most highly paid hedge fund manager, earning $1.7bn. The group's flagship $6bn Medallion fund, which trades in a lot of futures, has been quickly overtaken in growth by its newer Renaissance Institutional Equities Fund, which was launched two years ago and trades only in stocks. The Institutional fund, which was designed to hold $100bn, already manages $26bn. It charges much lower fees than Medallion's notoriously high 44 per cent performance fee, and was designed to provide lower volatility and a lower trading turnover, appealing to pension funds. Investors in Medallion last year received returns of more than 40 per cent, and investors in the institutional fund received more than 20 per cent, after fees. The Medallion fund now contains mostly Mr Simons' own money and that of Renaissance employees. Managed futures, a type of hedge fund strategy that was originally commodity trading, traditionally works best at times of high market volatility because it arbitrages tiny price differences. Managed futures funds have not performed as well as other strategies in the past few years because markets have had low volatility. In the year to date, managed futures funds returned an average of 4.2 per cent, compared with 8.9 per cent for hedge funds in total, according to the Credit Suisse/Tremont hedge fund index. There have been few such new funds launched recently. Like most of the largest hedge fund firms, Renaissance is a quantitative investor, developing complex mathematical models for its trading strategies. Mr Simons has said that his group hires no-one from Wall Street, but instead seeks out astronomers, mathematicians and physicists. Copyright 2007 Financial Times
Interesting news, but that paragraph is rubbish. It's no news to most that managed futures is a very broad Alternative Assets category, not a " type of HF strategy". And arbing "tiny price differences" has nothing to do with anything being discussed. LOL. Surprising to see such gross misinformation from the FT.
That managed futures is not a HF strategy is news to me. Maybe you should call the leading HF index providers and share your news...