Recruitment firm Heidrick & Struggles International, Inc. continues to release details on the hedge fund talent and compensation landscape for 2010.
Last year was what they call a “turnaround year” for the industry, as total hedge fund assets edged up over the $2 trillion mark once again.
Heidrick & Struggles surveyed more than 400 portfolio managers (PMs) and studied more than 100 hedge fund firms for their report. Some of their findings include:
– Higher demand for senior talent. The availability of senior talent is decreasing, as more professionals make the move to other funds, proprietary trading desks at banks, asset management firms and family offices.
– Bidding wars will return, as the increasing in hiring at banks and proprietary trading firms creates a higher demand for talent.
– Watch for a return of compensation guarantees in 2010 for front office professionals, although these may be linked to clawbacks and deferred forms of compensation.
Heidrick & Struggles also identified eight key characteristics of firms that are most likely to lose top talent. These characteristics include fund underperformance, lack of formulaic payouts to portfolio managers, shared portfolios, firms with less than $1 billion in capital, and funds undergoing a significant internal event, such as a merger or acquisition.
Claude Schwab, head of the U.S. hedge fund practice and a partner at Heidrick & Struggles, also identified “game changers” that trigger a top professional’s decision to leave even the best of firms. These include a very significant increase in capital allocation; sufficient capital to start one’s own firm; the opportunity to build a firm and/or be a key part of the firm’s succession plan; and the opportunity to serve a cause while investing.