D.E. Shaw is launching a new fund on July 1. The quantitatively-driven firm has raised at least $250 million for its new Plasma fund, a carve-out of the firm’s energy group, allowing investors to have a stand-alone exposure to the strategy, according to sources. The offering is mostly being made to existing investors.
The energy team, which has been with Shaw since 2002, is said to have generated roughly 25 percent annualized returns over the years. It is known to experiences a high degree of volatility while making many little trades. Of course, the strategy has a heavy quantitative approach.
Meanwhile, D.E. Shaw’s two main existing funds are having pretty good years as the firm tries to rebound from a recent exodus of investors. Through May, Composite International, Shaw’s larger multistrategy fund is up 6.3 percent, while Oculus, the firm’s smaller macro fund, is up 15.7 percent. According to an investor, Shaw has been on the right side of some macro bets. Also the longer signal quant strategies have been working better this year.
Last year, Composite ended the year up just 2.45 percent while Oculus rose 6.9 percent. Shaw also recently cut the management fee to 2.5 percent from 3 percent and the performance fee to 25 percent from 30 percent.
Since peaking at more than $40 billion or so about two years ago assets are down to $19 billion as of April 1. And despite employing 1,200 people it is still down from 1,600 just a year ago.
D.E. Shaw was founded in 1988 by David Shaw, who taught computer science at Columbia University after receiving his Ph.D from Stanford. Shaw, who no longer runs the firm on a day-to-day basis, calls the hedge fund firm a research lab that happens to invest, and obsessively stresses risk management and preservation of capital.
The firm says its investment activities may be divided into two broad categories — quantitative strategies based on mathematical and computational models and qualitative strategies based on the analysis of human experts.
