DE Shaw & Co is lengthening investor withdrawal periods on two of its largest hedge funds while closing smaller vehicles, reflecting a broader industry shift among multi-strategy managers toward tighter liquidity controls and more stable capital bases, according to a report by Bloomberg.
Under the revised terms, investors in the firm’s flagship Composite fund will be able to redeem up to 6.25% of their capital each quarter, effectively extending full exit timelines to four years. Investors in Oculus, its second-largest fund, will face a higher quarterly cap of 8.3%, implying a full withdrawal period of roughly three years. The changes take effect from 1 January next year.
The New York-based firm, which manages more than $90bn in assets, said the adjustments align with broader industry practice and are intended to enhance portfolio stability through market stress periods. DE Shaw has previously operated with fund-level liquidity limits that restrict total redemptions across vehicles.
Performance across its flagship strategies has been strong this year, with Composite up 10.4% through May and Oculus gaining 20.6%, according to people familiar with the matter.
Alongside the liquidity changes, the firm is closing its Valence and Multi-Asset hedge funds, both smaller multi-strategy vehicles with under $10bn in external capital. Investors in those funds will be offered the option to roll allocations into other DE Shaw strategies, including Composite, Oculus and Cogence, its human-run multi-strategy fund launched last year.
At the same time, the firm is launching a new internal capital pool designed to invest in its most capacity-constrained systematic equity and futures strategies. Roughly half of the new fund will be funded by staff, with the remainder allocated from Composite, while external clients will not have access.
The internal fund will charge a 4.5% management fee and a 45% performance fee, underscoring the firm’s emphasis on retaining talent and allocating scarce strategy capacity to employees as competition for investment professionals intensifies.
The moves come amid a wider trend across the hedge fund industry, with peers including Millennium Management and Citadel also tightening redemption terms. Several large managers have argued that longer lock-up structures help protect portfolios from forced selling during periods of market stress and improve long-term return stability.
Other multi-strategy firms such as Marshall Wace, Elliott Management and Verition Fund Management have adopted similar measures, as the sector increasingly prioritises durable capital and predictable fee structures.
