Renaissance Technologies finally turned the corner in May, although its positive return paled in comparison to that of its fellow hedge funds and of the broader markets.
The East Setauket, N.Y.-based firm, the 10th-largest hedge fund manager in the world, according to Alpha magazine, called its Institutional Equities Fund’s failure to do better last month “disappointing,” according to its monthly commentary, obtained by Dealbreaker.com. But it promised investors that their continued, if fading, faith in the fund would be rewarded in the long run.
RIEF rose between 0.61% and 0.8% in May, depending on which of its eight share classes one invests with. But the fund is still down by double digits after a brutal March and April; through the first four months of the year, the fund was down between 16.86% and 17.61%, while the average hedge fund is up in excess of 10%.
“RIEF is expected to underperform dramatic monthly gains in the [Standard & Poor’s 500] index but it is disappointing that we did not capture a larger fraction of the monthly gain,” the firm wrote. The S&P 500 jumped 5.59% last month, and the average hedge fund managed to match or exceed that return, according to several indices, during the best month for the industry in more than nine years.
Poor performance and investor redemptions have taken their toll on RIEF. The fund, which topped out with $27.8 billion in assets in August of 2007, had fallen to just $5.4 billion in April. The fund is more than $2 billion smaller now than it was at the end of last year.
Renaissance assured its dwindling band of investors that better days are ahead, promising that “the patient RIEF investor has been and should continue to be rewarded with higher average return and lower risk than is achievable through conventional long-only investing.”
“Research was productive in May,” the firm said. “We installed a new predictive signal of unusually high statistical significance and discovered another promising signal that will be explored further in the coming weeks.”