Quant pioneer Renaissance Technologies LLC sent clients an analysis of its performance and a rationalization of recent deep losses, an unusual move for one of Wall Street’s most secretive firms.
In the letter sent late Friday, the firm said losses of between 20% and 30% in 2020 for its three funds open to outside investors should have been expected at some point during the course of the funds’ histories. The letter partly blamed heightened volatility for the weak performance.
Still, some clients said the letter was short on meaningful explanations.
The decision to reach out to investors with a letter follows an awful year for several of Renaissance’s hedge funds, with some clients having expressed unhappiness in recent days. The weak performance of some of the firm’s outside funds has spurred investor withdrawals. Renaissance manages nearly $60 billion firmwide, down from about $75 billion a year ago.
“Although recent performance has been terrible and worse than prior performance would have suggested was likely for 2020,” the letter says, “in track records as long as ours, some risk-return ratios every bit as bad as the ones we are now seeing are not shocking.”