What's happening, who's hiring, and how much are they paying in the world of hedge funds?
What's the temperature?
Still hot, according to recruiters. "Everything's come storming back in the past month," says David Durham of hedge fund recruiters Durham Consulting. "It was quiet in August but since then a lot of people's performance has been good and there's a lot of hiring."
The picture behind the recruitment may be a little more mixed, however.
On the plus side, hedge fund assets are still rising (HedgeFund.net's survey showed hedge funds holding $2.68 trillion of assets as of 30 September, compared with $1.96 trillion a year earlier). Funds lost money in August, but made money in September and October: the average portfolio was up 3.2% last month, according to the Credit Suisse/Tremont Hedge Fund Index. It also emerged last week that one US hedge fund manager, Paulson & Co, made $3bn from the sub-prime crisis.
On the minus side, some funds have lost a packet. Goldman's Global Equity Opportunities fund fell 23% in August and the bank arranged for it to receive $3bn of its own money. Last week UK hedge fund Cambridge Place Investment Management made 25 people (or 20% of its staff) redundant after being hit by the sub-prime loan crisis over the summer.
Jerome Berset, senior analyst at Geneva-based Capital Management Advisors Group, a fund of funds, says it's all down to strategy: "Short term credit funds and high frequency stat-arb funds performed well. Funds investing in mortgage-backed securities, long short equities strategies, and funds investing in the Asian market were hurt."
Funds of funds, says Peter Elliott, director of hedge fund recruitment firm Emerson Chase: "Funds of funds are an area of increased growth. There's big demand for research analysts," he tells us.
Hedge funds which just might be in the market for additional staff some time soon include Absolute Capital, which lost two of its fund managers in October and its co-founder in September (and may therefore not be the most stable place to go), and Millennium Global Investments, a currency and alternatives manager which recently hired a UBS banker to drive its growth.
Who are they hiring?
Elliott says funds of funds are always keen to see résumés of lawyers or chartered accountants who've covered financial services and are equipped with "an inquisitive and probing mindset".
Capital Management Advisors is among the funds of funds looking for staff, including a senior arbitrage analyst. Berset says they're fairly open in their requirements, but a financial services background is preferable: "If the guy is good and is coming from another fund of funds, that's ok and we may be interested in hiring him. If he's a trader that could be interesting, and it could be interesting if he's coming from banking as well."
How much are they paying?
Elliott says funds of funds will pay entry-level base salaries of 55k to 65k depending on experience, plus potential bonuses of around 40% to 50%.
Durham says junior quants can earn anything from 60k to 80k in base salary per year at hedge funds, plus a 50% bonus in the first year, rising to 100% in year two.
If you're going to a hedge fund, you may be best heading for a fund with more than $100m under management. Man Group chief exec Peter Clarke is quoted in the FT today saying that one in 10 hedge funds is due to fail this year. And Reuters recently highlighted the fact that start-up and small hedge funds are finding their assets under management squeezed as investors seek the security of larger houses.
Durham advises candidates to head for funds operating multiple strategies, which are likely to be less susceptible to losses in any one area: "If you look at the billions of dollars that are being written off by investment banks, I'd say that hedge funds offer a platform that's at least as stable."