DE Shaw launches 4.5%/45% employee fund Phasor

DE Shaw has launched an employee-only investment fund named Phasor. The fund charges about 4.5% in management fees and a 45% performance fee. It will accept employee capital, including performance-linked bonuses, and invest in systematic equity and futures strategies.

Phasor is available only to DE Shaw staff and is designed to channel employee capital into the firm’s quantitative trading programmes. DE Shaw described the fee schedule as reflecting recent strong results in its systematic strategies and said the structure is meant to help attract and retain staff.

The fund’s fees sit above common institutional terms, where performance fees are often near 20% and many internal co-investment vehicles are offered at lower fees. DE Shaw has maintained relatively elevated fee levels for some external products and has made periodic changes to liquidity terms on certain flagship funds.

A number of multi-manager and quantitative firms have introduced compensation arrangements that ask or incentivise employees to commit part of annual bonuses to firm-managed products, sometimes with multi-year lock-ups. At several large platforms, senior investment professionals are being asked or encouraged to allocate significant shares of bonuses to internal strategies, creating longer-term capital for managers.

Supporters of employee-linked vehicles say the arrangements can align staff and investor interests and provide predictable capital for strategy deployment. Some firms have reported solid long-term performance from similar internal vehicles, and companies use those structures as retention tools and channels for staff to build personal wealth.

Phasor’s fee schedule places it at the high end for internal funds. The vehicle will initially be restricted to employees and focuses on systematic approaches in keeping with DE Shaw’s quantitative trading strengths.