D.E. Shaw extends redemption caps, closes funds, starts staff pool

D.E. Shaw announced changes to fund liquidity and capital allocation that take effect Jan. 1 next year. The New York-based multi-strategy manager will limit quarterly redemptions to 6.25% for its flagship Composite fund and 8.3% for its Oculus fund. The firm will also close its smaller Valence and Multi-Asset funds and create an internal capital pool funded by staff and reallocated capital.

Under the new caps, investors in Composite may withdraw up to 6.25% of their holdings each quarter, which implies a full exit timeline of roughly four years if investors redeem at the cap each quarter. Oculus investors will be able to redeem up to 8.3% per quarter, implying a roughly three-year full withdrawal timetable. These quarterly limits will replace the firm’s prior fund-level redemption restrictions for the two largest vehicles.

D.E. Shaw manages more than $90 billion in assets. Through May, Composite has gained about 10.4% year to date and Oculus about 20.6% year to date. The firm reported the liquidity changes aim to align fund liquidity with strategy capacity and to maintain portfolio stability during periods of market stress.

Valence and Multi-Asset, two smaller multi-strategy vehicles with under $10 billion in external capital, will be closed. Investors in those funds will be offered options to roll allocations into Composite, Oculus or Cogence, the human-run multi-strategy fund launched by the firm last year.

The new internal capital pool will invest in the firm’s most capacity-constrained systematic equity and futures strategies. About half of the pool will be funded by employees, with the remainder reallocated from Composite. External clients will not have access. The internal vehicle will carry a 4.5% management fee and a 45% performance fee.

Several other large multi-strategy managers have recently tightened redemption terms. Firms including Millennium Management and Citadel have applied longer lockups or stricter redemption schedules, and managers such as Marshall Wace, Elliott Management and Verition Fund Management have implemented liquidity limits or adjusted capital allocations.