If you thought hedge fund managers and traders were the beneficiaries of the current boom in hedge funds, think again.
Adam Zoia, managing partner and head of the hedge fund practice at Glocap Search in New York tells us that there has been disproportionate growth in headcount in infrastructure (back office) positions such as risk analysis, operations and in house legal counsel. He says this reflects the globalisation of hedge funds, their pursuit of multiple investment strategies and processing in different jurisdictions.
Glocap's 2007 Hedge Fund Compensation Report says front office compensation has risen 10% or 15% in the past year. But non-investment professionals have seen pay leap 20% over the same period.
Risk managers are being poached from investment banks that are bidding up the price to hold onto their own staff. According to Glocap, a director of risk management can now clear US$600k (316k) a year, encroaching on the pay of a chief operating officer who is likely to be earning in excess of US$800k annually.
In-house counsel is a growth area but there is a ready-made pool of lawyers attracting pay from US$300k to US$3m for the top people.
London pay on similar trajectory
UK recruiters say pay is reaching similarly stratospheric proportions in London. "300k is at the top end for the director of risk at a global hedge fund," says one. "But it's definitely obtainable."
Steve Yendell, managing consultant at recruiter Selby Jennings in London, tells us there's a growing realisation that by filling risk and operational roles hedge funds gain a competitive advantage. The trend, which he says has been particularly noticeable this year, bolsters investor confidence and helps funds attract investors.
As a result, Yendell says hedge fund back office staff are now in a candidate-driven market.