Posted by: jhamon | June 9, 2009

Rock Star In Commodities, But Not So Much In Equities

Renaissance Technologies, the world’s 10th largest hedge fund and the rock star of commodities funds, hasn’t fared nearly so well with its foray into equities:

Renaissance Technologies finally turned the corner in May, although its positive return paled in comparison to that of its fellow hedge funds and of the broader markets.  The East Setauket, N.Y.-based firm, the 10th-largest hedge fund manager in the world, according to Alpha magazine, called its Institutional Equities Fund’s failure to do better last month “disappointing,” according to its monthly commentary, obtained by Dealbreaker.com.  But it promised investors that their continued, if fading, faith in the fund would be rewarded in the long run.

RIEF rose between 0.61% and 0.8% in May, depending on which of its eight share classes one invests with.  But the fund is still down by double digits after a brutal March and April; through the first four months of the year, the fund was down between 16.86% and 17.61%, while the average hedge fund is up in excess of 10%.

The article in FINalternatives goes on to note that RIEF (Renaissance Institutional Equities Fund) has seen its assets under management (AUM) plunge from nearly $28B in August, 2007 to about $7.5B by the end of 2008, to around $5.5B in April of this year.

“Research was productive in May,” the firm said. “We installed a new predictive signal of unusually high statistical significance and discovered another promising signal that will be explored further in the coming weeks.”

It reminds of the old joke about the two backpackers in the Rockies breaking camp one morning when they hear a Grizzly in the brush. 

One guy runs to his pack, grabs his running shoes and laces them up. “What are you doing?” his friend says.  “You can’t possibly outrun that bear.”  

With a wink, the man replies, “I don’t have to outrun the bear.  I just have to outrun you.”

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