Citadel Asset Management, one of the giants in the hedge fund industry with $11 billion under management, has just launched an office in Boston to spawn the next generation of hedge fund managers.
Citadel founder, Kenneth Griffin, reportedly got his start investing while at Harvard in the late 1980s. Now he wants to hire investment professionals who are ready to move into the hedge fund investing model, with the security of a big firm behind them.
The Boston office could grow to 30 or 30 managers, according to an article in the Boston Globe. So far, they’ve hired three new managers, including Michael Elvin, a former technology sector specialist for Pyramis Global Advisors, a unit of Fidelity Investments.
“We’re hopeful that we can create the next layer of brightest and most talented money managers,’’ said Jon P. Venetos, a Citadel managing director, who is overseeing the launch of the Boston office.
The new venture lets the managers invest with Citadel money for two years, to build a track record they can later use to attract other investors. Citadel will reportedly help them raise the money, and will retain the right to invest in the new funds.
Industry experts say the big hedge funds are looking for a market advantage, after the lackluster results the industry has experienced since 2008. Seeding smart, young managers to launch smaller funds that might be more aggressive is one way of accessing new investment ideas and potentially boosting returns.
The transition to the hedge fund model will not necessarily be easy for some managers. Many managers in the Boston area, for example, are accustomed to managing money for large institutions and wealthy investors. Their focus has more often been on capital preservation and achieving positive returns, while not necessarily beating the market.
New hedge fund managers may have to sharpen their strategies, particularly on the short side, to achieve the kind of results that get noticed. Part of the Citadel program is set up to help them make this transition, according to the article.
Interested in working for Citadel? What would get you to jump ship from where you are now and set up your own fund? Add your comments below.