Julius Gaudio, D.E. Shaw

D.E. Shaw firming up in Asia to tap Japanese pension funds

Leading global hedge fund, D.E. Shaw, plans to increase its presence in Asia as part of a strategy to attract assets from Japanese pension funds heading into 2011. The New York-headquartered USD20billion fund manager currently has two employees in its Tokyo office, headed up by country representative Scott Roney. But Julius Gaudio (pictured), one of the firm’s six executive committee members and who himself only recently relocated to Hong Kong to head up the region, fully intends to add more headcount as the firm introduces hedge fund strategies to institutional investors. Responding to Hedgeweek on the Japan expansion via email, Roney said: “Our decision was primarily driven by our long-term objectives and our belief that a physical presence is crucial to building relationships with both current and prospective investors.” When asked whether growth of Japanese assets would be fast, Roney wrote that building business with pension funds was a “multiyear” process “so we’re starting to plant the seeds with pensions knowing that this will be a long-term effort”.

Worth some USD727billion, Japan’s corporate pension assets are a veritable gold mine for fund managers eager to take advantage of expected increased allocations in alternative products. Gaudio confirmed that the Tokyo office already had “several hundreds of millions of dollars” from Japanese clients and was “personally excited to get more involved in the pension space”. Others have also been quick to act, including US-based AIFAM, and Dutch money manager, Robeco Group, which aims to double pension fund assets within two years. Roney said that the average allocation from Japan’s corporate pension fund sector to alternatives was 10 per cent or more and expects to “see a lot of activity”. Asked where potential investor interest might lie, Roney said Japanese investors had till now been especially interested in macro futures and strategies focused on the futures markets. “Over the long-term we believe investors will deploy capital across a broad spectrum of investing disciplines and asset classes,” wrote Roney.

 

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