D.E. Shaw's flagship funds trump market volatility to beat S&P 500 in 2025, source says

• Oculus fund has never had a negative year since its 2004 inception, while Composite has had just one losing year since 2001
• D.E. Shaw manages over $85 billion across multiple strategies, with results aligning with peers like Bridgewater's record profits
• Market volatility from trade wars and geopolitical uncertainty created price arbitrage opportunities that benefited active trading strategies

D.E. Shaw's flagship hedge funds significantly outperformed the S&P 500 in 2025, with the Oculus fund generating a net return of 28.2% and the Composite fund returning 18.5%, compared to the benchmark's 16.4% gain. The investment firm, which manages over $85 billion across various strategies, capitalized on a year marked by extreme market volatility driven by President Trump's unpredictable trade, fiscal, and geopolitical policies.

The strong performance aligns with broader hedge fund success in 2025. Bridgewater Associates reported its highest profits in its 50-year history, while AQR Capital Management's multi-strategy Apex Strategy gained 19.6% and its Helix Strategy returned 18.6%. The volatility created profitable trading opportunities as markets swung from record highs in mid-February to near bear-market lows in early April, before reaching fresh records in December.

D.E. Shaw's consistent track record remains impressive, with Oculus maintaining a perfect record since its 2004 inception (14.4% annualized return) and Composite experiencing only one negative year since 2001 (12.9% annualized return). The firm attributed part of its success to identifying "supply-demand imbalances" in investment instruments, allowing for profitable arbitrage opportunities.

The outperformance demonstrates how sophisticated hedge funds successfully navigated 2025's challenging environment, where active portfolio management and volatility trading strategies proved more valuable than passive index investing. The results underscore the continued relevance of hedge funds during periods of market turbulence and policy uncertainty.