Overview:
In the H1 2023, large Hedge Funds (especially the large Multi-Strat Platforms) maintained robust hiring activity, primarily focusing on portfolio managers, analysts, and quants across asset classes. This hiring spree is primarily due to impressive industry-wide returns in 2022, particularly for the larger multi-strategy platforms. Many of these larger hedge funds are struggling to deploy capital fast enough, with several even turning away capital from investors, and the competition for top talent has never been fiercer.
On the flip side, several smaller and/or recent start-up hedge funds, even those performing well, have been finding it challenging to raise capital. Many of these smaller shops are merging with larger platforms that provide solid infrastructure, allowing their founders/lead PMs (often heavy hitters with strong track records) to concentrate on performance without the admin headache. This usually comes along with compelling enough comp packages and a large enough book size to make it an easy decision.
Key Hiring Areas:
At Laz Partners, we are seeing especially strong demand within Rates Vol, Credit Long/Short (Inclusive of IG, HY, Opportunistic Credit), EM Credit, EM Macro, and Equity Long/Short. The bar is higher than ever for talent and one area in particular that a lot of funds have been struggling to get things right is Credit Long/Short, where there have been a lot of underperforming PMs across the board (due to a tough market) and several top hedge funds are running out of places to look, even turning towards asset managers and more long-only biased shops, which typically would not have been a hunting ground in previous years. Within Equity Long/Short, there has been a lot of churn of PM teams in several of the larger platforms, however hiring still remains a strong focus to replace underperformers that have recently departed.
Performance Highlights:
As of late July (and according to BusinessWeek), Citadel is leading the pack with 8.6% returns, trailed by Point72 at 5.8% and DE Shaw at 5.1%. Firms like Verition, Millennium, and ExodusPoint are also up a few percentage points, with many of the other big-name multi-strategy funds flat or just slightly up at best. There are of course a select few PMs within these firms that have been having a strong year, however performance mostly seems to be lagging 2022, with a few exceptions.
New Hubs in Focus – Paris, Dubai, Abu Dhabi and Miami:
There has been a strong uptick in hedge funds setting up offices in Dubai & Abu Dhabi, as well as growing their presence in other cities such as Miami and Paris. While a more friendly tax environment plays a part (both for the PMs as well as the HFs), the rising costs and taxes in traditional hubs like London and New York are also making the decision easier for high-earning PMs to consider relocating. The allure of sunnier climates and being closer to clients (such as Sovereign Wealth Funds) in the MENA region is also an added incentive.
At least 30% of candidates we have been speaking with in major financial hubs like London (especially) and New York have expressed an interest in relocating to some of these newer locations and we expect this trend to accelerate
