April 2011 Newsletter: Hedge Fund Industry Recruiting is on the Rise
Posted on: Monday, April 4th, 2011
After nearly two years of stagnation, hedge fund recruiting is definitively trending upwards. Total industry assets under management (AUM) levels are approaching their pre-2008 levels, and alternative investment managers are looking to substantively increase their staff. The employment picture has brightened across the board, with managers of emerging funds, blue chip hedge funds and funds of funds all looking to aggressively grow their businesses.
A number of factors are driving this hiring uptick, which began in summer 2010. We attribute this to improved performance and an inflow of assets amongst many alternative asset classes. Moreover, after leaving vacated seats empty since 2008, many funds can no longer put off the acquisition of critical investment, marketing and infrastructure professionals. To provide a glimpse into the supply/demand imbalance, one has only to look at the fact that the headcount at a number of funds is still approximately 20% below the 2007 highs despite the fact that AUM levels are nearly back to normal.
Hiring Trends at Emerging and Large Hedge Funds and Funds of Funds
While funds of all sizes are hiring, differing trends and patterns can be observed when comparing the personnel acquisitions of both emerging and larger, more institutional firms. Emerging funds are making significant investments in marketing and infrastructure staff. Also adding marketing and infrastructure staff are some of the high profile start-ups that launched in Q1. Demand is particularly high for senior-level infrastructure professionals such as CFOs and CROs. While this in itself is good news for industry hiring trends, what is more important is that this is a key, lagging indicator pointing to a healthier alternatives sector. The fact that firms are finally willing to invest in positions that do not add directly to a fund’s revenue means that the previous issues for the industry are over.
Meanwhile, hiring trends at larger, “blue chip” hedge funds with more developed infrastructures are reflective of their need to be more investor friendly. We feel that many funds are being more accommodating in regards to transparency, managed accounts and fees. Also, many brand name funds have had to hire marketers for the first time in years in order to replace assets that were redeemed during the crisis. As usual, demand for fundraisers with institutional rolodexes remains high, but there has also been an increase in demand for marketers with a network of high net worth individuals and contacts at family offices.
When one looks at the needs for more specific positions at both emerging and blue chip funds, long/short equity portfolio managers and high frequency traders still top the list of the most sought after investment professionals. However, demand has also heated up for commodity analysts and traders. At the same time, there appears to be an oversupply of consumer and health care analysts particularly given that many funds’ portfolios are already overweight in this sector.
Finally, one surprising trend that we’ve seen has been the increased recruiting at fund of funds, many of which are looking to rebuild their research and due diligence teams post-Madoff.
Global Trends in Hedge Fund Hiring – Asia Leads the Way, For Now
Just as much of the global GDP growth in the past two years has come from Asia, so too has a sizable portion of hedge fund hiring. Many US and UK-based funds, some of which had a presence in Asia before the credit crisis, are looking to re-open or build offices for the first time in Hong Kong or Singapore. Much of the talent that was displaced when the aforementioned Asian offices were closed down in 2008 have either found their way to start-ups or can now be seen working at or in some cases running the Asia offices of the US/UK funds that weathered the storm.
Demand for Qualified Candidates Now Outweighs Supply
The result of these industry developments is a meaningful increase in overall headcount. Whereas managers only added staff tentatively, if at all, over the last two years, there are now many cases were qualified candidates are able to choose between competing offers at the end of their job search. Moreover, as many firms are no longer providing guaranteed compensation packages, the deciding factor in many candidates’ decisions is whether the hiring firm is willing to provide such a guaranteed arrangement.
Long Ridge Partners’ Hedge Fund Hiring Trends and Alternatives Job Reports
Each month from now on, you will be receiving a short email from Long Ridge Partners with details on new job opportunities and other industry trends and news. Each quarter, we will also provide you with more detailed insight into hiring trends in the alternatives sector in quarterly letters like this one. We look forward to keeping you abreast of new career opportunities along with other industry news and trends that will be critical to you in either your search for employment or your efforts to add new staff.
If you are an alternative investment industry professional that is looking to explore new opportunities, Long Ridge Partners may have an opportunity for you. Please view our active positions. If you are looking to expand your team, please email us.
Best regards,
Long Ridge Partners