Jim Simon’s Medallion fund charges a whopping 49% in fees, a 5% management fee and a 44% incentive fee and nobody seems to be bitching. Even in the hedge fund world this is high where 2% and 20% is more the norm, this is incredibly high. In order to get this fee you better put up some pretty good numbers and that may be an understatement when it comes to describing the Medallion Fund lately.
According to the NY Post,
Simons’ $8 billion Medallion fund, the oldest of the three Renaissance Technologies funds, was up 48 percent at the end of July, net of fees, according to people familiar with the funds’ returns.
This is incredible considering most other funds are getting slapped around this year and with the drop in commodities in July, it could get even uglier. Unlike many many hedge funds which just “go big” and pick a direction, Medallion profits by using a computer system that relies on lightning fast trades using proprietary computer models. The higher the volatility, the better their programs perform and as we know, the markets have been extremely volatile. July was one of the more volatile months in years and as expected, Medallion had a very solid 8% return this past month.
Before you get all giddy and try and use Aunt Sally’s to leverage your way into the fund, keep in mind that Medallion is one of three funds run by Renaissance and it’s nearly impossible to get into. The firm’s Renaissance Institutional Equities Fund on the other hand is open but people aren’t dying to get in. Launched in 2005, it reached a peak of $28 billion in assets and is now down to $15 billion. Reason? Same great fees, not so good results.