Billions of investment dollars are pouring into the hedge fund industry and, unsurprisingly, investors are supporting well-known industry figures that are striking out on their own. Stephen Cohen, for example, recently opened his family office to outside investment and raked in more than $3 billion.
According to a recent article in the Financial Times, the four largest hedge fund launches thus far in 2018 have raised north of $17 billion in capital, while during the same time-frame, existing funds raked in a comparatively modest $13.7 billion.
Hedge Fund Starts
For the first time in three years, hedge fund starts are outpacing hedge fund closures. Notably, many of these launches have been ushered into existence by the industry elite…well-known Wall Street stars such as Michael Gelband or David Sundheim, Generally speaking, these start-ups are not the small multi-million dollar funds usually associated with new hedge fund firms. Rather, they are firms with investor commitments in the billions of dollars. The leading example of such a fund is the one started by Michael Gelband, formerly a fixed-income trader at Millenium Management, whose fund secured $8 billion in investment capital and earned it the distinction of being the largest launch in the history of hedge funds.
A Resurgence
The hedge fund industry is experiencing a post-financial-crisis rebirth, fueled by increased market volatility, under performing markets and innovative investment strategies. While many investors previously welcomed the decline in the number of hedge funds, they are demonstrating a keen interest in start-ups managed by the best and brightest in the industry.
While it is true that under-performing funds resulted in a series of closures in recent years, it is apparent that investor appetite for well-managed funds that offer innovative investment strategies, remain very much on the radar of savvy investors.
Lessons from the Past
Investors have learned harsh lessons in the years subsequent to the great financial crisis, the most significant of which is that true investment talent is a scarce commodity. As a result, proven talent is able to draw substantially larger pools of investment capital than was the case with past start-ups, frequently controlled by less vaunted managers whose track records lacked the luster necessary to attract billion dollar commitments. Clearly investors are looking for proven performance.
What this Trend Means for Hedge Fund Jobs
Larger hedge fund firms mean greater opportunities for employment. Larger firms earn more management fee dollars. This translates into the ability to hire more and better talent than small firms with fewer assets under management and correspondingly fewer dollars with which to hire talented staff.
Investor momentum clearly favors the hedge fund industry in 2018. The natural result of this momentum will be hedge fund jobs. In short, this is the best of times in which to seek a career as a hedge fund professional.
Keep an ear to the ground for start-ups such as Michael Gelband’s ExodusPoint and David Sundheim’sD1 Capital. Funds such as these have the wherewithal to pay for IT infrastructure, lawyers, regulatory compliance, staff and other back-office functions. Therefore, they offer the most robust opportunities for employment…if you have the right-stuff.
{ Comments on this entry are closed }
