What D.E. Shaw’s First Human Fund Says About the Market
It’s a surprising turn for the money manager, and equally surprising is the enthusiastic response from investors.
The human touch.
Photographer: Timothy A. Clary/AFP via Getty Images
D.E. Shaw announced it was opening — and quickly filled to capacity — a new multistrategy hedge fund that eschews algorithms and relies entirely on human discretion. Interpreting the actions of one of the most secretive and quirky large hedge fund organizations is a bit like reading tea leaves, but this may well be a harbinger of changing financial markets.
Although D.E. Shaw is primarily known for its algorithmic strategies, it has always incorporated a significant amount of human discretion in many of them. So, it’s no surprise that it can manage a discretionary fund. The surprise is that it would want to, or that investors would choose it so enthusiastically over more experienced and specialized discretionary managers. Why not blend the discretion with the unquestioned value of its computer models?