State of the Hedge Fund Job Market

The Financial Times recently offered a quick snapshot of the health of the hedge fund job market as we move into 2010, and how soon we might expect a recovery.

2009 was a year of deep freeze, as many hedge funds simply tried to recover from the huge investor redemptions and free-falling market of 2008. That left practically no money for additional hiring. Firms instead tried to hang onto the staff they had.

2008 to 2009 was also a period when many big banks scaled back their proprietary trading desks. This dumped hundreds of experienced traders onto the street, flooding the market with trading talent. Thus, the chances of finding a position at a hedge fund during this period, without a stellar track record, were even more difficult.

Moving ahead, in the short term, industry insiders believe the surplus of trading talent will continue. Long term, however, job propsects looks brighter. One reason is that many of the larger hedge funds are beginning to nurture talent with in-house programs.

Some large hedge funds, such as SAC, have begun programs for candidates right out of university. Another firm, DE Shaw, one of the largest hedge funds in the world, prides itself on its recruitment capabilities. It hires “gifted mathematicians and computer scientists as well as extraordinary generalists” according to the firm’s website, and also notes that many of its managing directors hold degrees in fields as disparate as English, psychology, and Russian studies.

As the economy thaws and hedge funds recover, the larger funds will likely increase their commitment to graduate recruitment. However, only the highest quality candidates will have a chance at landing one of the few coveted positions.