Jim Simons, a mathematician who started the most profitable quantitative hedge fund in history, passed away in New York City on Friday, according to a statement from his foundation on its website.
At Renaissance Technologies, Simons pioneered the use of mathematical models and algorithms to make investment decisions, leaving a record that rivaled that of industry titans like Warren Buffett and George Soros.
Simons flagship Medallion Fund saw annual returns of 66 per cent from 1988 to 2018, according to Gregory Zuckerman's book "The Man Who Solved the Market."
Foundation of Renaissance
Simons graduated from the Massachusetts Institute of Technology in 1958 with a bachelor's degree in mathematics and, at the age of 23, from the University of California, Berkeley, with a doctorate in the same field. The quant expert left academia to try his hand at trading, and in 1978, at the age of 40, he founded Renaissance.
In contrast to the majority of investors, who assess a company's value by looking at its sales, earnings, and profit margins, Simons solely depended on an automated trading system to capitalize on trading patterns and market inefficiencies.
He was dubbed "Quant King" for his innovative use of an automated trading system to take trading decisions.
Between 1988 and 2018, his Medallion Fund generated trading profits of over USD 100 billion, with an annualized return of 39 per cent after fees. Only in 2005 did Simons permit his staff members to make investments in the fund, which had been closed to new contributions since 1993.
Wall Street has seen a rise in the use of quantitative strategies based on trend-following models since Simons transformed trading beginning in the 1980s. A JP Morgan estimate states that more than 20 per cent of equity assets are currently made up of quant funds.
Simons said at a conference in New York in 2007 that "we hire physicists, mathematicians, astronomers, and computer scientists, and they typically know nothing about finance." "We haven't made any hirings outside of Wall Street," he added.
