Hedge fund managers likely will have an easier time recruiting experienced analysts in 2016 than they did during the past few years.
They’re going to need them to pump up returns, said Joseph B. Goldsmith, partner, Goldsmith & Co., New York, a specialist money management recruiter.
“We still don’t know how the year will end up for hedge funds because of tremendous recent volatility caused by the drop in oil prices and high-yield bonds,” Mr. Goldsmith said, adding that many hedge fund managers will seek “aggressive analyst upgrades to improve performance in 2016.”
Aggregate hedge fund performance has been flat, with the HFRI Fund Weighted Composite index returning 0.3% year-to-date through Nov. 30, compared to 3% for calendar year 2014 and 9.1% in calendar year 2013.
But the slightly positive 11-month return this year masks a vicious 4.2% decline in the third quarter.
Even flat hedge fund returns in 2015 will definitely dampen bonuses for hedge fund analysts this year, Mr. Goldsmith said.
Hedge fund companies on the prowl for talent will find it “easier to recruit analysts after a tough return environment. With bonuses at low levels, hedge fund analysts will be more willing to listen to new offers,” Mr. Goldsmith said.
Two other investment management functions likely also will see a lot of action next year.
Now that increasing numbers of hedge fund managers are diversifying their investment lineups with long-only, illiquid hybrid private equity and liquid mutual or Undertakings for Collective Investment in Transferable Securities vehicles, they’re searching for senior executives from large diversified traditional and alternative investment firms to coordinate cross-sales, Mr. Goldsmith said.
“Hedge fund managers don’t tend to have experience in cross-selling different asset class vehicles and are looking for good candidates who do (have it) from non-hedge fund companies,” he added.
Adding more and different kinds of investment vehicles spells more complexity for the hedge fund manager. Because of that, many firms are looking to hire very experienced chief financial officers to professionalize their compliance departments, Mr. Goldsmith said.
