The Secret World of Jim Simons [PDF]
Simons’ risk-adjusted returns are even more impressive. Paul Wick, manager of Seligman Communications and Information Fund, leads all U.S. mutual fund managers, according to Morningstar, with annual returns of 31 percent since 1990. But his Sharpe ratio over the past three years is 0.42; for the same period, Legg Mason’s celebrated William Miller III boasts average annual returns of 24 percent — and a Sharpe ratio of 0.64. Simons wracked up a ten-year Sharpe ratio of 1.89 throughout the 1990s, with a 2.52 ratio for the last five years of the decade. Sharpe ratios are a measure of risk-adjusted returns. The higher the number, the better.
How does Simons do it? Start with a world-class mathematical mind. In 1976, at 38, Simons won the American Mathematics Society’s Veblen Prize — awarded every five years, it is the geometry world’s highest honor — for his work in the excruciatingly esoteric field of differential geometry.
"Jim Simons is without question one of the really brilliant people working in this business," says quantitative trading star David Shaw, chairman of D.E. Shaw, which boasts returns above 50 percent this year. "He is a first-rate scholar, with a genuinely scientific approach to trading. There are very few people like him."
Renaissance Technologies fund whiz James Simons first traded stocks in the early 1960s, while in graduate school at the University of California at Berkeley.
