Sunday, June 2, 2013

Medallion fund performance

The fund performance is just simply blowing my mind. 38% average annually compounded return. Which make $1 invest in 1988 becomes $1600 in 2009. Noone even came close. Not George Soros, not Warren Buffet.


That average return is after fee, which is 20% at the beginning, and 36% and 44% since 2000. But since the fund investors are also employees. That mean someone works for Rentec since 1988 investing in the fund has a return of 57.8%. $1 becomes 19,590$ in 22 years. That is 19 thousands times increase.  What else in nature has this rate of growth?
I have only one wish, one wish only, that is one day I found a hedge fund that outperforms Medallion 
:).

http://www.insidermonkey.com/blog/best-hedge-funds-jim-simons-medallion-fund’s-returns-and-alpha-1679/Important note about the fund:
http://chinese-school.netfirms.com/abacus-hedge-funds-Jim-Simons.html


" Renaissance's approach differs from the "convergence trading" popularized by John Meriwether's Long-Term Capital Management and similar arbitrage shops. Convergence traders price financial instruments based on complex mathematical models, find two different instruments that are cheap and expensive on a relative basis and then buy one and sell the other, betting that the prices will, at some point, have to return to their proper level. The Renaissance approach requires that trades pay off in a limited, specified time frame. And Renaissance traders never override the models. 

The return is so high that:
Three years ago Medallion formed an internal fund-of-funds to invest in outside man- agers. In part, the fund was looking for new ways to invest excess capital that in- vestors didn't want back 

P/S: Medallion fund was confirmed to have return of 80pct before fee. 

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