The Unsolved Mystery of the Medallion Fund’s Success
Renaissance Technologies’ famous but secretive in-house hedge fund doesn’t move in step with any market trend.
Most people on Wall Street have a tough time explaining the Medallion Fund, managed by the hedge fund company Renaissance Technologies. The most common answer is to just shrug and call it a money printing press. Currently open only to RenTech’s employees and a few other people connected to the firm, it’s generated average annual returns of close to 70% before fees since 1988 without ever suffering a yearly loss. After fees, it’s had one down year.
The Man Who Solved the Markets, a new book by Gregory Zuckerman, tells the story of Renaissance and its colorful founder Jim Simons, who worked as a mathematician and Cold War code breaker before trying his hand at the markets. Much of what Simon and his team—which includes dozens of Ph.D.s—actually do remains a secret hidden within its computerized trading system. (Renaissance declined to comment.) But a close look at return data from 1988 to 2010 answers some interesting questions and raises others.