Cash & Liquidity ManagementInvestment & FundingCapital MarketsHedge Fund DE Shaw Shuts out New Investors

Hedge Fund DE Shaw Shuts out New Investors

DE Shaw, one of the world’s largest and most profitable hedge funds, has closed its doors to new investors as it looks to safeguard returns according to a
Financial Times
report.

The business daily said that people familiar with the matter confirmed that its Oculus and Heliant funds were closed earlier this year and the firm’s flagship multi-strategy fund, Composite, was closed at the end of the summer. Between them the three funds manage most of the firm’s $32bn in client assets.

A spokesperson for DE Shaw declined to comment and the paper noted that despite its size, the firm is one of the most publicity-shy organisations on Wall Street.  Of the largest five hedge funds in the world, only one, the UK’s Man Group, continues to accept money into its flagship fund.

The
FT
notes that quantitative easing (QE), bank deleveraging and the closure of many bank trading desks have combined to make many traditional hedge fund strategies far less profitable than they once were as markets have become more illiquid and highly correlated.

In the four years since 2009, the average hedge fund has eked out a return of just 15%, according to Hedge Fund Research (HFR) data. While DE Shaw has comfortably outperformed its peers in the same period, the paper reports that management believe it is prudent to limit its size early. Only a number of smaller bespoke funds, investing in specialist areas such as reinsurance or mortgage bonds, remain open to new money at the New York-based firm.

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