Renaissance Medallion Fund: An Exclusive Investment Guide

The Renaissance Medallion Fund has been closed to outside investors since 1993 (or 2005, according to another source). The only way to invest in the Medallion Fund is to become an employee at Renaissance Technologies. The Medallion Fund has created a unique track record, generating 66% annualized returns before fees and 39% net of fees from 1988 to 2018.

Medallion Fund's high annual returns

Medallion, the flagship fund of Renaissance Technologies, has delivered consistently high annual returns since its inception in 1988.

From 1988 to 2018, Medallion generated annualised returns of 66% before fees and 39% net of fees. This means that an investment of $100 in 1988 would have grown to $398,723,873 by the end of 2018, a staggering compound return of 63.3%.

To put this into perspective, $1 invested in the Medallion Fund from 1988 to 2021 would have grown to almost $42,000, while the same amount invested in the S&P 500 would have only grown to $40 over the same period. Even a $1 investment in Warren Buffett's Berkshire Hathaway would have only grown to $152 during this time.

Medallion's high annual returns can be attributed to its unique investment strategy, which relies heavily on mathematical models and algorithms to trade in financial markets. The fund's approach is quantitative, involving the determination of stock performance probabilities and the balancing of its portfolio accordingly. This includes calculating variables such as the standard deviation of a stock's returns and comparing this data with a broader set to make investment decisions.

The fund's success is also due in part to its ability to minimise transaction costs. While Medallion engaged in millions of trades, suggesting significant transaction costs, the reported gross returns are after these costs have been accounted for, indicating that Renaissance was effective at keeping such costs low.

Medallion's impressive performance is further highlighted by the fact that it never had a negative return during its 31-year period, even during the dot-com crash and the 2008 financial crisis. In those years, the fund's returns were 56.6% and 74.6%, respectively.

Medallion's high annual returns and consistent performance have made it one of the most successful and mysterious hedge funds in the world, creating a track record that is unlikely to be surpassed anytime soon.

Medallion Fund's track record

The Medallion Fund, managed by Renaissance Technologies, is one of the most successful and mysterious hedge funds in the world. The fund was founded in 1988 by mathematician and former codebreaker Jim Simons. It is famed for having the best record in investing history, returning more than 66% annualised before fees and 39% annualised after fees over a 30-year span from 1988 to 2018.

To put this into perspective, $1 invested in the Medallion Fund in 1988 would have grown to $20,000 (net of fees) in 2018, compared to $20 if invested in the S&P 500 index, or $100 if invested with Warren Buffet. The Medallion Fund outperformed one of the best-performing indexes and asset classes of the last few decades by 1000 times, and one of the best investors of all time by 200 times.

The Medallion Fund has only lost money in one year net of fees, in 1989. In 2008, when the S&P 500 lost 37%, the Medallion Fund posted a gain of 82% net of fees.

The Medallion Fund's success is attributed to its use of quantitative models and algorithms to trade in financial markets. The fund's creators were mathematicians who knew little about companies and their business. Instead, they dug through mountains of data, employed advanced mathematics, and developed cutting-edge computer models to find individual patterns in data and exploit each pattern to turn a small profit. When added up, these small profits resulted in significant gains.

The Medallion Fund charged a 5% management fee and a 44% performance fee, which is significantly higher than the typical 2% annual management fee and 20% performance fee charged by most hedge funds. Despite this, the Medallion Fund generated the greatest track record in investment history.

Unfortunately, the Medallion Fund has been closed to outside investors since 1993 and is only available to current and former employees of Renaissance Technologies.

How Medallion Fund works

The Medallion Fund is a US-based investment fund that has delivered a unique track record that is unlikely to be surpassed anytime soon. Medallion Fund's approach is purely systematic and mathematical, using quantitative models to predict the markets. The fund has generated 66% annualised returns before fees and 39% annualised returns net of fees from 1988 to 2018.

The Medallion Fund has only lost money in a single year net of fees – in 1989. In 2008, when the S&P 500 lost 37%, the Medallion Fund posted a gain of 82% net of fees. The fund reportedly makes money in a similar way to a casino, making enough small wins over time to add up to large profits.

The Medallion Fund has been closed to external capital since 1993, and its trade secrets are closely guarded. However, it is speculated that the fund's success is due to a combination of factors, including low execution costs, high employee retention, and disciplined management of capital.

The Medallion Fund is managed by the hedge fund company Renaissance Technologies, founded by Jim Simons, a mathematician and Cold War codebreaker. Simons spent years creating quantitative models to predict market movements, drawing on his expertise in mathematics and cryptography.

While the specific strategies employed by the Medallion Fund remain a closely guarded secret, it is known that the fund uses computer-based models and advanced mathematics to analyse vast amounts of data and identify patterns that can be exploited for profit. This approach, known as quantitative analysis, involves scanning stocks on numerous data pointers to find the best investment opportunities.

The Medallion Fund's performance has sparked debates and inspired the launch of other quantitative hedge funds, but none have come close to replicating its returns.

How to invest in Medallion Fund

The Medallion Fund is a hedge fund offered by Renaissance Technologies, founded by Jim Simons in 1988. It has generated impressive annual returns of 66% before fees and 39% net of fees from 1988 to 2018. The fund has a unique track record and is considered one of the highest-paying hedge funds of all time.

However, it is important to note that the Medallion Fund has been closed to outside investors since 1993 or 2005, depending on the source. The fund's profits and underlying capital are owned by the founder, Jim Simons, and other employees. Therefore, the only direct way to invest in the Medallion Fund is to become an employee at Renaissance Technologies. Renaissance offers job openings throughout the year in various fields, including data programmers, network engineers, and research scientists, mainly based in New York.

Renaissance Technologies also offers other hedge funds that are open to the public for investment purposes, although their performance is not comparable to that of the Medallion Fund. These include the Renaissance Institutional Diversified Global Equity Fund, Renaissance Institutional Diversified Alpha, and Renaissance Institutional Equities Fund.

While it is challenging for non-multi-millionaires to invest in hedge funds due to legal restrictions, there are some workarounds. For example, investment trusts are allowed to buy into hedge funds, and ordinary individuals can buy investment trusts. However, it is important to note that no investment trust has a stake in the Medallion Fund, as far as is publicly known.

Alternatives to Medallion Fund

The Medallion Fund has been closed to outside investors since 1993 and is only available to current and former employees of Renaissance Technologies. However, Renaissance Technologies does have other funds that are open to outside investors. These include the Renaissance Institutional Equities Fund (RIEF) and Renaissance Institutional Diversified Alpha (RIDA). Unfortunately, these funds have not performed as well as Medallion and do not follow the same strategy.

If you are interested in investing in quantitative analysis, there are other options available. You can consider investing in stocks through Jarvis Invest, which uses the same underlying principles as the Medallion Fund. Jarvis Invest scans stocks on 1.2 crore data pointers to find the best companies for investment. Another option is to invest in ETFs and other portfolios that use algorithmic trading approaches. While you may not be able to copy Jim Simons' exact trading style, you can still include some exposure to these types of investments.

It is also worth noting that investment trusts are allowed to buy into hedge funds, and ordinary individuals are allowed to buy investment trusts. However, it should be noted that no investment trust has a stake in the Medallion Fund.

Finally, bitcoin is another alternative investment option that is accessible to everyone.

Frequently asked questions