What We Do
The D. E. Shaw group is trusted by investors across the world to manage their assets by seeking the optimal balance of risk and reward. While we’re known as a pioneer in quantitative investing, we also have considerable expertise in areas that involve fundamental analysis or portfolio manager discretion. We use a combination of quantitative and qualitative tools to uncover independent, hard-to-find sources of return across global public and private markets.
Investment Approach
Within the D. E. Shaw group, we run on collaboration, not internal competition. Teams work together to share trade ideas, identify and address risks, build tools, and explore new opportunities. Our staff includes world-class mathematicians, physicists, computer scientists, economists, analysts, business-builders, and system architects relying on specialized trading, operational, and compliance expertise developed over 30 years.
Assets Under Management
As of September 1, 2024, the D. E. Shaw group had more than $60 billion in investment and committed capital. Our investment activities fall into two broad categories:
Alternative Investments
Our alternative investment capabilities date back to 1989 and consist of both larger, multi-strategy investment vehicles and more focused, strategy-specific investment products. These strategies focus on the delivery of absolute returns, generally with low targeted correlation to traditional assets like equities.
Long-Oriented Investments
Our long-oriented strategies focus on major, tradeable asset classes. Active Equity, launched in 2000, is a suite of strategies that allows institutional investors to customize their exposures to particular equity indices. Orienteer, launched in 2013, aims to offer diversified exposure to global asset classes, alongside other select alpha opportunities.
Strategies
Our systematic strategies run on quantitative and computational techniques developed by the firm over 30 years of research and trading. We believe a strong culture of rigorous analysis and scientific research, supported by a robust infrastructure, is the bedrock of a successful quantitative investment process. We aim to identify statistically robust market inefficiencies through hypothesis formulation, testing, and validation based on practical knowledge of markets and advanced computational methods.
We also devote a large share of our attention to discretionary investment activities based on the identification of potentially profitable opportunities by experienced staff. These strategies rely primarily on human analysis to discover, and capture, pricing inefficiencies across a broad array of asset classes spanning public and private markets. Our discretionary investment groups benefit from a highly rigorous and process-driven investment approach that is generally focused on attempting to isolate idiosyncratic profit opportunities while maintaining a low correlation to broader markets and macroeconomic variables. We believe our collaborative investment approach allows us to optimally deploy the deep domain expertise of our investment teams, adapting and reacting to ever-evolving market conditions.
Several of the strategies deployed by the firm seek to identify investment opportunities through a hybrid approach that combines aspects of our systematic and discretionary strategies. For example, an initial quantitative idea or “forecast” may be unaware of an unusual market event that is known to our analysts, or a fundamental view might be best vetted through the use of quantitative tools.
We apply the same analytically rigorous approach to investing across a number of systematic, discretionary, and hybrid strategies.
Systematic
Comprises a suite of systematic, benchmark-relative equity strategies that seek to generate attractive long-term excess returns through a risk-aware approach to stock selection.
Encompasses the firm’s longest-running strategy, which applies proprietary quantitative models based on perceived technical, event-related, or fundamental inefficiencies in the global equity markets.
Engages in trading of systematic forecasts generally based on technical inputs or on macroeconomic data; instruments traded relate to equity indices, government bonds and interest rates, currencies, and commodities.
Hybrid
Concentrates on relative-value trades involving, among other things, convertible and derivative securities.
Leverages the firm’s considerable alternative investment resources to pursue long-biased investments across a range of global asset classes.
Discretionary
Invests in a broad range of asset-backed products—including mortgage-backed securities and consumer assets—in both cash and synthetic markets.
Conducts fundamental financial, operational, and legal analysis in connection with secondary market trading, credit extension, and control investments in distressed securities in the global credit markets.
Focuses on identifying discretionary investment opportunities and predicting changes in the prices of asset classes in markets around the world.
Pursues inefficiencies in the global markets for electricity, natural gas, crude oil and refined products, and other energy-related commodities.
Includes traditional, activist, and event-driven investments covering a broad range of industry sectors across global markets.
Involves equity and debt investments at various stages of the corporate life cycle and across the capital structure, including less-liquid opportunities in credit and related markets in the U.S. and Europe.
Concentrates on various forms of property catastrophe risk arising from natural disasters and other types of peril.
Develops, constructs, owns, and operates high-quality renewable energy projects in the U.S.; developed the nation’s first offshore wind farm.
Technology
We use sophisticated technology to run our investment activities, with more than 700 talented developers and engineers pushing its potential. When platforms don’t meet our standards, we build our own.
The entrepreneurial spirit has always been a part of our firm’s culture. (We even created one of the world’s first free email service providers.)
In 2015, we formed Arcesium LLC to make part of our capabilities available to other asset managers. Arcesium is now an independently operated company that provides post-trade technology and services to financial clients, while continuing to support the D. E. Shaw group and its funds.
Open Source
As a technology development firm, we are an active user of open source software. We support the open source community by funding software initiatives, contributing ideas and features to existing projects, and releasing our own innovative tools.
Some of our notable open source contributions include:
Explore some of our other work on GitHub.
Managing Risk
Some might say we have an obsession with risk management. We’d have to agree. We believe it’s a key differentiator between firms that survive and thrive over the long run and those that don’t. At the D. E. Shaw group, our risk management capabilities have been tested by market cycles and crises over the course of more than three decades.
A central principle of our approach is that risk management and portfolio management are not separated: every one of us is a risk manager. We’re guided by our Risk Committee, which evaluates risk in various dimensions and manages the allocation of capital among our strategies.
Our Risk Committee is made up of:
Read some of our thinking about risk management in “Lessons from the Woodshop” and “Diversification and Beyond” in our Library section.
Spotlight: Renewables
Since 2005, we’ve invested in more than 70 renewable energy projects, including the country’s first offshore wind farm. But we’re more than just an investor. The D. E. Shaw group has built three industry-leading renewable energy companies and has a long track record of acquiring and developing solar and wind projects.
We’re proud to be on the leading edge of renewable energy investing and development in the U.S.
Industry Leadership
Over the past decade, we’ve received more than 65 industry award nominations, winning in multiple categories, including for overall management, fund performance, and operational excellence.
We also take an active role in regulatory and trade group committees to promote best practices and weigh in on key policy issues.
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