December 22, 2006
New Renaissance Hedge Fund May Be Plateauing Off
Too much success is a difficult thing to handle. News has it that Renaissance Technologies Corp., a top-performing hedge fund has decided to close its doors to outside investors. The hedge fund firm, which has quadrupled its assets to $16 billion this year, wants to better manage its flood of money.
The main reason for this decision is that Renaissance suddenly finds itself in a piquant situation. The returns are historically high no doubt but these incredible returns are being dampened. The reason: too much money in equity strategies at the Institutional Equities Fund. So, they found a great solution. They decided to limit capital from investors, as they don’t want to "take in too much too quickly." Reuters.com reports:
The Renaissance fund, which employs mathematical "quantitative" strategies to rapidly trade only U.S. equities, was billed at its inception last year as being able to successfully generate returns on $100 billion, which would make it by far the largest hedge fund. But few in the industry expected the new fund to reach anywhere near that amount. And while some month-to-month swings are to be expected from any hedge fund, recent returns suggest Renaissance might reach its optimal size well below $100 billion, experts said.
Read more: New Renaissance hedge fund may reach limits
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