There is an interesting article in Bloomberg today about the surprising lack of oomph in the $29 billion Renaissance Institutional Equities fund:
Simons’s Renaissance Fund to Trim New Cash as Returns Trail
Renaissance Institutional gained 5.8 percent this year as of July 6, compared with the S&P 500’s 8.9 percent advance. The fund will limit monthly inflows to less than $1.5 billion, the current average, said a person who attended a meeting Simons held with clients last week at New York’s Pierre Hotel.
“It’s hard to put all that money to work,” said Brett Barth, a partner at New York-based BBR Partners, which invests in hedge funds. Simons is cutting off “the spigot a bit,” said Barth, who wasn’t at the presentation.
Simons opened the fund for institutional investors two years ago. Unlike Renaissance’s Medallion fund, which invests in stocks, bonds, currencies and commodities, the institutional fund focuses on equities. Medallion, which manages money only for Simons and his employees, had its second-best year as of July 6, said the person who heard Simons speak. The fund has climbed at an annual rate of more than 30 percent since 1988.
Six months’ worth of performance is hardly worth sweating over, but one does wonder if David A. Hsieh was right when he estimated that there is only $30 billion in alpha per year to be had by the $1 trillion industry.
Hope Mr. Simon’s will not have to settle for a serenade of Don Henley’s Not Enough Love as he trades: “I was either standing in your shadow or blocking your light. Though I kept on trying I could not make it right. For you girl, there’s just not enough
love alpha in the world.”