Hedge Fund Hiring Very Selective, Generally Sluggish

August 19, 2013

Some large hedge funds are taking advantage of a difficult environment for startup hedge funds by hiring portfolio managers who either once considered setting up their own fund or failed to succeed on their own and were forced to shutter their shop. Among firms that are hiring portfolio managers with experience of running their own fund are some of the world’s biggest hedge funds including Marshall Wace, Millennium Management, CQS and BlueCrest Capital Management.

New, Smaller Hedge Funds Encounter Significant Obstacles

Image: WSJ blogMichael Sargent, a partner at hedge fund Marshall Wace, which has assets under management of approximately $10.7 billion says his firm expects to benefit from the difficult environment for small hedge funds. Michael points out that when compared to 2007, the barriers to setting up own fund are substantially higher today as a result of increased regulation, higher cost of running a fund and a challenging environment for raising capital. The firm disclosed that it specifically targets failed startup hedge fund managers who tried and failed to set up their own fund. Overall, Marshall Wace plans to hire about twelve people including portfolio managers in the next two years.

Likewise, hedge fund CQS recently hired Chris Boas, who in the past was the global head of credit at Citadel’s securities unit and considered setting up his own fund but shelved it eventually. Chris took up the offer of senior portfolio manager at CQS over running his own fund. CQS also persuaded Zacharias Bobolakis, a former managing director and proprietary trader at UBS to shelve plans to launch his own hedge fund and instead join the firm.

Hedge Funds Differ On Hiring SAC Capital Alumni

Hedge funds are adopting different approaches to hiring portfolio managers, analysts and traders who have worked at SAC Capital, founded by billionaire hedge fund manager Steve Cohen but which has been indicted in July of criminal insider trading charges by the justice department.

While hedge fund Millennium Management which has $18 billion in assets has decided not to consider fund managers from SAC Capital for fear of hiring someone who could potentially be charged with insider trading, there are other funds that are open to taking SAC traders on board. Hedge fund firms open to considering SAC applicants include Bluecrest Capital Management, Citadel and Balyasny Asset Management. SAC Capital portfolio managers are among the best paid in the industry. Their compensation is structured to incentivize them to make money making ideas and profitable trades. They usually earn between 15 percent and 25 percent of profits they make and also get a share of the money making ideas they feed to Cohen.

Hedge Funds Very Selective In Hiring

Commenting on the employment picture within the hedge fund industry, Michael Karp, CEO of Options Group, a financial-services recruitment firm in New York says hedge funds are not hiring like gangbusters like they were before the 2008 financial crisis. He adds that hedge fund hiring nowadays is very selective.

Gary Goldstein, the CEO of New York-based Whitney Group, an executive search firm that focuses on financial services says that much of the demand at hedge funds is from bigger firms that are adding new strategies that were once the purview of banks including asset-based lending and mezzanine financing.

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