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In the scenario you're outlining, the Medallion Fund's yearly returns would be capped by the underperformance of the other RenTec funds. There are two problems
by auntienomen 7y ago
In the scenario you're outlining, the Medallion Fund's yearly returns would be capped by the underperformance of the other RenTec funds. There are two problems with this scenario: 1) The Medallion fund has been outperforming since the 90s, while the other funds opened in 2005. 2) The Medallion fund has extracted vastly more than would be available from RIEF/RIFF underperformance.
- patentatt 7y agoNot necessarily. Using the weight of the big funds to put your thumb on the scale of the market could absolutely shift market prices in a way that can be exploited to reap more reward than is lost. In fact, it is a good explanation for why the medallion fund is size-limited. Also, as someone else noted, there is a 10x size difference between the two pools of money. So the big fund can “lose” 1% which generates a 10% increase in the small fund. Then you advertise that you are capable of incredible returns to induce people to invest in the big fund. Another reason why the small private fund is limited in size.