New Mexico’s state pension fund has redeemed an estimated $100m from Two Sigma Investments, despite strong performance from the quantitative hedge fund, amid an ongoing dispute between its billionaire founders, according to a report by Bloomberg
The Public Employees Retirement Association of New Mexico (PERA) said organisational issues surrounding Two Sigma had created too much uncertainty, with no clear timetable for resolving the internal conflict.
The report cites unnamed people familiar with the matter as revealing that the pension’s investment in Two Sigma’s Absolute Return Enhanced Fund was worth approximately $100m at the end of March. The redemption was made in June.
PERA had previously acknowledged the fund’s strong investment record. The strategy had outperformed both the pension’s benchmark and comparable funds, with its ability to analyse enormous quantities of data at high speed providing what the pension described as a competitive advantage.
The Absolute Return Enhanced Fund has gained 12.4% so far this year, following a 15% return in 2025, according to a person familiar with its performance.
Two Sigma has subsequently secured replacement capital for the strategy, one of its largest funds, which has been closed to new investors for several years.
The withdrawal nevertheless highlights the extent to which institutional investors are increasingly weighing organisational stability alongside investment performance when assessing hedge fund allocations.
Two Sigma has been dealing with an increasingly public breakdown in relations between co-founders John Overdeck and David Siegel. The pair have disagreed over the management and direction of the firm, with the tensions contributing to senior departures and internal disputes.
The latest disagreement could ultimately be referred to arbitration. At issue is whether Siegel’s choice to replace a departing member of the management committee should also receive the co-chief executive title, potentially requiring an independent third party to settle the dispute.
Representatives for Two Sigma and the New Mexico pension reportedly declined to comment.
