When is big too big? Goliath of hedge funds wants to pump it up

DE Shaw, one of the world's biggest hedge funds is making a big push into traditional asset management to diversify its customer base – part of a growing trend towards the convergence of hedge funds with traditional money management.

Shaw is expected to announce on Monday the launch of a new product aimed at institutional investors who want conventional money management, but with the ability to sell short up to a certain level.

Trey Beck, who is in charge of developing the institutional business for DE Shaw, said the group, which manages $23bn in hedge fund strategies, had only about $300m in traditional asset management but planned to increase this substantially and had just won three new mandates.

"We are in the [traditional] business to manage tens of billions of dollars, and I can envisage a time when DE Shaw will have traditional asset management funds in excess of the hedge fund business," he said.

"In ten years' time it will be less important whether you are a hedge fund or a traditional manager, but whether you can generate alpha [above-benchmark returns]", he said.

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