Hedge funds are finding a wealth of talented managers for hire, shed by banks and other financial firms in the downturn, but few are in a position to take advantage. The industry is now able to select from a wider pool of talent without paying the sky-high compensation earned during the boom years, executives at the Reuters Hedge Funds and Private Equity Summit in London said.
"Its a fabulous time to hire," said Michael Hintze, chief executive of hedge fund firm CQS. "The prop desks have shed people... a number of other hedge funds have been shut... so theres a lot of talent out there." CQS has hired a distressed funds manager for its New York office and is looking to add two or three further team members.
Top traders are also being more realistic about the remuneration they can demand as the credit crisis bites. "Its more reasonable too. The days of somebody walking in and saying if youre not going to pay me $2 million Im not interested, they are well and truly over," said Hintze. Yet hedge fund supremos still get phenomenal pay, a recent survey by Alpha Magazine showed.
The industrys 25 best-paid managers earned $11.6 billion in 2008 - barely half the $22.5 billion they earned in 2007, but still roughly half a billion dollars on average. Banks have been shedding hundreds of thousands of jobs and cutting are cutting back on the size of their proprietary trading desks, putting many talented traders onto the jobs market.
However, hedge funds are facing plenty of their own pressures too, limiting their ability to benefit. After record performance losses last year, investors pulled out $150 billion from hedge funds in the fourth quarter and a record 778 hedge funds liquidated during the fourth quarter, according to Hedge Fund Research.
On Thursday Man Group, the worlds biggest listed hedge fund firm, said it was cutting 15 percent of permanent headcount, or about 270 jobs, as assets and profits fell. These tougher conditions make it easier for hedge funds in a strong position to identify and recruit the best managers.
"Now is the first serious opportunity to start identifying talent and theres more talent around," said Mark Kary, chief executive of Polar Capital. But many are sitting tight, trying to survive and keep hold of talented managers they already have.
"There are a lot of talented and experienced managers who have been made redundant," said Colin McLean, managing director of SVM Asset Management. "Across the whole fund management industry weve seen quite a big fall in revenues ... People want to hold onto the talent theyve got. Id say its a pretty tough ask for people to be hiring in this environment."
Comments
Comments are closed.