London based investment boutique, Derwent Capital Markets has announced the launch of its highly anticipated hedge fund. The fund, domiciled in the Cayman Islands, will be Europe’s first to utilise sentiment derived from real-time social media data analysis.
The £25 milllion ($40.5 milion) hedge fund is basing investments on an analysis of 10% of the 10 million tweets sent daily. The firm applies trading algorithms and sentiment analysis to those tweets before making its bets.
Paul Hawtin, Founder and Fund Manager, commented: “For years investors have widely accepted that financial markets are driven by fear and greed but we’ve never before had the technology or data to be able to quantify human emotion. This is the 4th dimension.
Dale Gabbert, funds partner at Reed Smith LLP advising Derwent Capital Markets Ltd, added: “Social media is not just changing the way we live, it is now also changing the way we invest. We are delighted to have worked with Derwent on this ground breaking fund. Given the fund’s use of social media data, we’ve worked closely with our market leading media group on IP issues and look forward to continuing our relationship with Derwent.”