many hedge funds and mutual funds are slashing fees, laying off employees and losing customers following years of subpar performance. then there is renaissance technologies llc. the hedge-fund firm, which relies on closely held computer models and algorithms, has staged a comeback after an uneven spell, with its funds posting market-beating gains for more than the past year. now they are getting a cash influx, even as rivals suffer withdrawals. renaissance attracted more than $7 billion in new investor money over the past year from wealthy clients of ubs group ag, citigroup inc. and others, according to people close to the matter. renaissance now manages more than $36 billion, up from $27 billion a year ago, even after returning about $1 billion from its signature medallion fund, which is closed to investors. the success is the latest sign that some quantitative funds are beating traditional investors. <u+201c>renaissance is an exception to the rule,<u+201d> says matthew litwin, head of manager research at greycourt & co., which invests in hedge funds. the $14 billion renaissance institutional equities lp fund, or rief, was up 15.3% this year through sept. 23, investors say. that topped the 7.6% total-return gain for the s&p 500 and a rise of 4.3% for the average stock hedge fund, according to data tracker hfr.<u+00a0>rief rose more than 17% last year and 15% in 2014. the $10 billion renaissance institutional diversified alpha int. lp fund rose 12% this year through sept. 23, after climbing 16.2% in 2015 and 11.4% in 2014.<u+00a0>a newer fund launched in april, the $2 billion renaissance institutional diversified global equities fund, is up about 2% this year. medallion also has beaten the market recently, an investor says. about $22.65 billion of renaissance<u+2019>s assets are owned by the firm<u+2019>s founder, jim simons, and <u+201c>renaissance-related capital,<u+201d> according to investor documents. the figure also represents holdings of the firm<u+2019>s 300 employees, including over 90 ph.d.s in computer science, statistics and computational linguistics. renaissance began combing enormous troves of data for patterns over three decades ago, well before rivals and unrelated businesses embraced such strategies. in august, rief held shares in at least 10 industries. over the past year or so, the fund reduced its exposure to growth stocks and boosted holdings of value shares, investors say, benefiting from the outperformance of value stocks, those that buyers view as underappreciated by the marketplace. renaissance funds also use leverage, or borrowed money, to amplify returns. some traditional stock pickers say unexpected trading patterns caused by the rush into exchange-traded funds make investing harder for those reliant on fundamental strategies, such as buying underpriced stocks. by contrast, renaissance<u+2019>s models rely on signals from a range of inputs, including technical factors related to stock-price movements, helping the firm avoid some issues slowing traditional investors, clients say. <u+201c>technical factors are swamping fundamental analysis lately,<u+201d> helping renaissance, says amanda haynes-dale, co-founder of pan reliance capital advisors, which became a renaissance client this year. that recipe hasn<u+2019>t always worked for renaissance, which mr. simons founded in 1982. the firm opened two hedge funds to outside investors in 2005 and 2007 but experienced mediocre early results. in 2010, when mr. simons stepped back from running the east setauket, n.y., firm, new leadership considered closing the two hedge funds open to outside investors. by then, assets had fallen to $5 billion from over $20 billion a few years earlier. last year, renaissance closed a $1 billion futures fund due to poor interest. renaissance<u+2019>s recent rebound comes as the company<u+2019>s executives are playing larger roles in politics. co-chief executive robert mercer has been among the largest political donors of the 2016 election cycle, spending more than $13 million to back texas sen. ted cruz through a super pac while also funding breitbart news, the conservative media outlet. he and his daughter, rebekah, played a role in the august shake-up of donald trump <u+2019>s presidential campaign, recommending breitbart chairman stephen bannon and republican pollster kellyanne conway for top posts. mr. simons has given millions to a hillary clinton super pac. executives focus on trading and try to avoid talking about politics, employees say. renaissance<u+2019>s cash inflow raises questions about how long its winning streak can continue. many firms see performance weaken after assets swell. some clients say they are keeping a wary eye on renaissance<u+2019>s burgeoning size. renaissance avoids hiring wall street veterans, helping it avoid mistakes made by those reliant on traditional investing methods, the firm says. <u+201c>the advantage scientists bring<u+2026>is less their mathematical or computational skills than their ability to think scientifically,<u+201d> mr. simons said, according to an investor document. <u+201c>they are less likely to accept an apparent winning strategy that might be a mere statistical fluke.<u+201d> write to gregory zuckerman at gregory.zuckerman@wsj.com
renaissance technologies: hedge fund on a $7 billion winning streak - wsj
gregory zuckerman