A brief revival in hedge fund opportunities
Recruitment by hedge funds is tentatively increasing compared to the first half of the year. But will it last?
Significant trading activity due to the market’s volatility has forced some employers to bolster their operational capacity to process these trades. The collapse of Lehmans has seen others take operational and fund administration duties in-house, forcing headcounts up.
This could herald a change in the hedge fund’s structure
Managing costs and risk are just as crucial as managing the portfolio in the current market.
Institutional clients are putting pressure on hedge funds about regulation control, due diligence and compliance. Investors are conducting extra due diligence, also requiring hedge funds to buy in more skills. With operations being the greatest cost to hedge funds at circa 20% of revenue or 30% of management fees, candidates with experience of mitigating operational risk or improving operational systems are the hottest commodity.
The fall out from Lehmans has resulted in significant movement in front office recruitment too. Traders, particularly those with a proven track record of managing money, are being snapped up to rescue trading activity. Investor relations professionals will also become key moving forward, as hedge funds look to sustain existing investments above attracting new ones.
Since the second quarter, temporary contracts are being terminated and the workload placed onto existing permanent staff. While fewer temporary assignments are being converted into permanent posts, they are now more likely to be extended and the professional moved internally to support other departments.
But as cost cutting continues, more firms may consider the products offered by services providers, prime brokers and administrations, and outsource their operations and fund administration duties. This could herald a change in the hedge fund’s structure to focus strictly on performance and front office activity, and the end of the recruitment revival for operational support roles.
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