Jim Simons' Medallion Fund
finished 2010 strongly, posting a better than 30 percent
return, according to investors. This, of course, is net of a 5
percent management fee and 44 percent performance fee.
You may recall that just one month ago, when Medallion was
up 25 percent for the year, it was threatening to post its
lowest gain since 1989 if it finished the year up less
than 21 percent.
But, alas, Medallion had a strong December along with most
of the global market indices. The performance, however, still
put it below its net return range of between 40.5 percent and
84.1 percent in each of the prior four years.
Remember, for years Medallion has only been open to
partners, employees and friends. Simons' two newer public funds
also posted strong absolute performance. Renaissance
Institutional Futures Fund (RIFF) introduced in
October 2007 finished up 22.7 percent after
climbing just 3.8 percent last year and losing 12 percent in
2008. The Renaissance
Institutional Equities Fund (RIEF) fell by more than 1
percent in December, and finished the year up 16.5 percent.
This is its biggest gain since 2006, when the fund returned
nearly 21 percent. It had lost money the prior three
However, RIEF was created to generate gross annual returns
of 400 to 600 basis points above the S&P 500 over rolling
3- to 5-year periods. And the S&P 500 surged in December,
finishing the year up 13 percent. As a result, RIEF has only
beaten the benchmark by its hoped-for margin in two of its six
years of existence.
Over the past three years, RIEF beat the S&P by 350
basis points, lagged by nearly 3100 points and beat the
benchmark by more than 2100 points. Even so, back in September
Medallion reaffirmed its commitment to RIEF and RIFF, which
managed more than $7 billion combined at year-end.
"Our confidence in these quantitatively-managed, long
investment horizon products has been bolstered both by an
intensive reexamination of their underlying technology and by
their performance during the recent tumultuous economic
period," said Medallion co-CEOs Peter Brown and Robert Mercer
in a letter to investors at the time.
They noted that since its inception RIEF has returned a
total of 4.55 percent while experiencing only 60 percent of the
volatility of the S&P 500. During that same period the
index declined 5.34 percent. The firm also noted that
Renaissance staff added substantial capital to these funds.