The Renaissance Medallion fund is one of the best performing and most famous hedge funds on Wall Street. Renaissance runs the Medallion fund, which has emerged as one of the largest and most prominent hedge funds around. The fund is now worth many billions of dollars. Unfortunately, the fund is also closed and it can be difficult to invest in the exclusive fund.
Being “closed” means you can’t simply go to your stock broker and put in a trade for the Medallion Fund. Instead, you’d have to basically be invited to invest. Renaissance does occasionally solicit investments, but usually from larger investors, not your average traders.
Why is the Medallion Fund closed? Honestly, the only people who really know are the managers of the fund and investment company themselves. Some concerns might be overextending themselves. Another likely possible motive is that managers may have feared that they would grow so large that they’d actually interfere with markets themselves. This, in turn, could undercut their ability to invest.
Many hedge funds have struggled in recent years, with many funds under-performing versus markets. As a result, hedge fund managers have been forced to slash fees, lay off staff, and in some cases, simply wind down operations. Many investors are now either managing their own portfolio, or investing in simpler index based funds that feature very low fees.
The managers at the Medallion Fund, however, continue to enjoy regular, lauded success.
About Renaissance & the Medallion Fund
The Renaissance investment company is believed to be managing roughly $65 billion dollars in assets. Most of the assets are under one of three funds. You already know about the Medallion Fund, which is the flagship fund for the group. Besides Medallion, there is also an Institutional Equities Fund, and the Institutional Diversified Alpha.
James Simmons founded Renaissance Technologies LLC in East Setauket, New York-based in 1982. Simmons is a very interesting person, being an award-winning mathematician as well as a Cold War code hacker. Simmons decided to create a fund that focuses on systematic trading. Unlike many investors, Simmons believed in using only quantitative models that relied on advanced mathematical and statistical analyses.
Why medallion fund returns are so high
Medallion fund returns regularly beat out market averages. Even during the Great Recession, the Medallion fund regularly produced profits while other funds struggled to keep their heads afloat. This impressive track record helps explain why the fund has performed so well over the years, and why so many people want to invest in the Medallion fund.
So how does the medallion hedge fund actually accomplish this? They use a variety of technical analyses and formulas to guide their trading strategy. The hedge fund managers and others are very, very tight-lipped in regards to these proprietary technical analysis tools. In a very real sense, these tools are the “secret sauce” that allows Medallion to consistently beat markets and outperform competing hedge funds.
In order to build these powerful formulas, Medallion and the Renaissance management company hire PhD’s and other experts with advanced understanding of data, statistics, various markets and other fields. The Medallion staff reads more like a Harvard University academic department than a traditional investment company.
This brain power has been key to the Medallion hedge fund’s immense success. Quite simply, Medallion invests primarily in knowledge, and this knowledge in turn pays off with a high performing fund.
Other hedge funds have had a tendency to focus on flash and cocktail parties and all the politics and side stuff that comes with investing. As a result, many have underperformed. Now, many investors are questioning the value of many professionally managed funds. Why pay a hedge fund manager a fee when he or she under performs markets?
How You Can Use Technical Analysis For Your Trading
You’re going to have a hard time investing in the Medallion Fund directly since it’s a closed fund. However, you can use technical analysis and formulas to empower your own trading and investing strategies. Technical analysis is a very powerful tool for traders. Most day traders and intraday traders use technical analysis in some fashion or another. Even if you don’t do day trading, however, technical analysis can still provide a lot of insights.
Technical analysis is great because it’s emotion free. Let’s be honest, a lot of investors become emotionally attached to companies, brands, and stocks. If you love your iPhone, it can be hard to critically analyze Apple Inc. By using cold, hard, numbers-based technical analysis, however, you don’t have to worry about these factors when you’re using technical analysis.