Who said succession planning can’t work in the hedge fund industry? Just ask the folks at Renaissance Technologies, which has not missed a beat since its founder, Jim Simons, passed away last year.
The computer-driven juggernaut’s two public funds are off to very strong starts this year after one of the funds enjoyed its best year in 2024 and another posted its largest gains in more than a decade. These are the latest examples of a hedge fund firm that managed succession so it thrived after its founder died.
The Renaissance Institutional Diversified Alpha Fund is up 9.05 percent through February after climbing 15.6 percent in 2024, according to a hedge fund database. Last year’s performance was the best since the fund’s inception in 2021.
The Renaissance Institutional Equities Fund is up 11.85 percent through the first two months of 2025, per the database. Last year, it jumped 22.7 percent, its best year since 2011, when it was up 34 percent. RIEF managed nearly $36 billion at the beginning of 2020.
The RIDA Fund trades equities and derivatives with the goal of maximizing long-term returns while attempting to meet a standard deviation target.
RIEF trades global equity securities and derivatives with the objective of achieving a long-term risk-adjusted return that, on a gross basis, exceeds that of the fund’s benchmark index — the Standard & Poor’s 500 Index with dividends reinvested — while attempting to maintain a relatively low beta to the index of 0.4 or lower and lower volatility than the index, according to a description in a regulatory filing. RIEF is expected to have a long-term average leverage of about 2.5 to 1, and the trading strategy’s objective is to be no more than $100 net long for each $100 of equity.
Both funds are permitted to invest in stock index futures or stock index option contracts for risk reduction purposes. Both also hold significant individual positions. The firm warns that these large positions “can be difficult to exit quickly without affecting their prices.”
On December 31, 2023, the Renaissance Institutional Diversified Global Equities funds were merged with the RIDA funds. Before 2020, RIDA managed $15 billion and RIDGE $14.3 billion.
Simons, considered the greatest hedge fund manager of all time, died last May at 86. He founded Setauket, New York–based Renaissance Technologies’ predecessor firm in 1978. Simons reportedly had a net worth exceeding $31 billion and was the only hedge fund manager to make Institutional Investor’s Rich List in each of its first 23 years (he will not qualify for this year’s 24th annual ranking).
Renaissance currently manages $41 billion. The firm currently has about 300 employees, including 90 PhDs in math, physics, computer science, and related fields, according to its website.
Renaissance, of course, is best known for its legendary Medallion Fund, which closed to outside investors in 2005. Little is known about it these days except for a few facts that have trickled out. We know Medallion was up 76 percent in 2020. From 1988 to 2021, it generated a 66 percent annualized return before fees, or 39 percent after fees.