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Two Sigma Investments, LP Review

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Two Sigma Investments LP

Two Sigma Investments LP is a hedge fund manager based in New York City. It manages 17 hedge funds and has more than $66.14 billion in assets under management. There are 604 advisors at Two Sigma. There are no other types of funds at Two Sigma.

Two Sigma is well known in some circles, though not for its hedge funds but for its artificial intelligence program called Halite. This was a challenge for coders, allowing them to build smart bots to try to take control of a virtual grid. There was a second version, Halite II, where players used ships to compete for control of planets.

Two Sigma Investments Background

Two Sigma was founded in 2002 and has been registered with the SEC since 2009. It was founded by John Overdeck and David Siegel. Mark Pickard is a co-founder. Trusts established by Overdeck and Siegel are the principal owners of the firm.

The only clients of the firm are the 17 hedge funds it manages. There are no other institutional clients and no high-net-worth investors on the rolls.

Two Sigma Investments Investment Philosophy

A variety of strategies and methods are used at Two Sigma to build the investment portfolios for the hedge funds the firm manages. The strategies include:

  • Statistically based strategies
  • Merger arbitrage
  • Risk arbitrage
  • Closed-end funds
  • Fundamentally driven strategies
  • Event-driven strategies
  • Long/short strategies
  • Volatility arbitrage and trading strategies
  • Structured credit trading strategies

Quantitative mathematical models are generally used to implement these strategies.

Largest Hedge Funds Managed by Two Sigma Investments

Two Sigma Spectrum Portfolio

AUM: $13,367,145,003
Minimum: None
Beneficial Owners: 462

Two Sigma Equity Portfolio

AUM: $11,985,699,582
Minimum: None
Beneficial Owners: 283

Two Sigma Strategies Fund

AUM: $9,338,298,442
Minimum: $1 million
Beneficial Owners: 121

Two Sigma Equity Spectrum Portfolio

AUM: $8,738,009,889
Minimum: None
Beneficial Owners: 486

Two Sigma Equity Fund

AUM: $8,150,103,779
Minimum: None
Beneficial Owners: 401

Fees at Two Sigma Investments

Most clients at Two Sigma pay an asset-based fee of between 2% and 4%.

There are also performance-based fees for funds at the firm, generally between 20% and 30% of the net profits a fund earns in a year.

What to Watch Out For

As noted above, hedge funds are complicated instruments that are loosely regulated. You have to be an accredited investor before you can invest in a hedge fund.

There is also one disclosure on the record at Two Sigma. It was filed in 2016 and relates to an affiliate breaking a rule of the Chicago Board of Trade. Specifically, certain clients and TSI clients held aggregated wheat futures positions in excess of the CBOT standard all-month limit. Upon discovery, the overage was liquidated to bring the aggregate position into compliance with the CBOT limits. As part of the settlement, TSI agreed to pay a fine of $25,000, while neither admitting nor denying any rule violation.

Becoming a Client of Two Sigma Investments

The best way to talk to someone at Two Sigma about potentially investing in their funds is to contact the office nearest you from the list here.

Investing Tips

  • If you're considering investing in hedge funds, think about working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool connects you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors, get started now.
  • Don't forget to think about protecting your investments after you die; make an estate plan, even if you think you'll be around for a long time.

How Long $1mm Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about the cost of living in retirement for that location.

Least
Most
Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology We analyzed data on average expenditures for seniors, cost of living and investment returns to determine how many years of retirement a $1 million nest egg would cover in cities across America.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city. Using this data, SmartAsset calculated the average cost of living for retirees in the largest U.S. cities.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%. Then, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would cover retirement expenses in each of the cities in our study. Cities where $1 million lasted the longest ranked the highest in the study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research