Hedge-fund giant Renaissance Technologies LLC is shutting an underperforming fund “due to a lack of investor interest,” according to a letter to investors reviewed by The Wall Street Journal, a rare misstep for the venerable quantitative firm.
The $27 billion firm said it would wind down its Institutional Futures Fund, which manages $1.3 billion, by the end of the month. The fund was down 1.75% this year through September, a person...
Hedge-fund giant Renaissance Technologies LLC is shutting an underperforming fund “due to a lack of investor interest,” according to a letter to investors reviewed by The Wall Street Journal, a rare misstep for the venerable quantitative firm.
The $27 billion firm said it would wind down its Institutional Futures Fund, which manages $1.3 billion, by the end of the month. The fund was down 1.75% this year through September, a person familiar with the matter said.
The move puts Renaissance on a list of high-profile investment firms that have pulled back from hedge funds in recent weeks. On Tuesday, Fortress Investment Group confirmed it would close its flagship macro hedge fund by year-end after heavy losses and redemptions. Bain Capital LLC’s Absolute Return Capital LLC hedge-fund arm also recently decided to shut.
A majority of the cash in the closing Renaissance fund belonged to Renaissance employees, the person said. The letter didn’t offer details on the reasons behind the recent losses.
One of the best-known hedge-fund firms in the world, Renaissance was among the earliest to embrace computerized trading models. James Simons, a mathematician and Cold War code breaker, founded the firm more than three decades ago and ran it until he stepped aside in 2010. The firm is now run by two of his former lieutenants.
The Institutional Futures Fund is part of the firm’s suite of lower-price funds aimed at relatively risk-averse college endowments, pension funds and their ilk. Renaissance’s flagship Medallion fund is open only to Renaissance employees.
The newer funds have had mixed results. The Institutional Futures fund, which trades only futures contracts, posted an average annualized return of 2.86%, after fees, lagging the firm’s other funds. The $10.5 billion Renaissance Institutional Equities Fund, focusing on stocks, is up 11% this year and has had average annualized returns of 9.79% since its inception a decade ago.
In the letter, Renaissance Chief Financial Officer Mark Silber said there had been dwindling interest in the Institutional Futures Fund since the firm launched a separate, more diversified fund three years ago.
“We kept RIFF open for any investors who wanted, or had a mandate, to invest in a futures-only fund,” he wrote. “Unfortunately, there are not enough such investors to justify the stand-alone futures fund.”
Reuters earlier reported the fund’s plans to close.
Write to Rob Copeland at rob.copeland@wsj.com