State Street Global Advisors, the world's fourth largest money manager, is to quadruple its hedge fund staff this year in a bid to catch up with rival Barclays Global Investors.
State Street, which manages $3bn in hedge fund assets, will hire up to 40 managers. The team, based in London under Chris Woods, started in 2003 and employs 10 people.
It is interviewing commodity trading advisers and futures managers, event-driven, special-situation and capital structure arbitrage managers.
Woods said the recruitment drive would be directed at filling gaps in its business by bringing in managers with experience in more exotic strategies. The group runs long/short equity, fixed-income and currency hedge funds.
He admitted that hedge fund business, which launched in 2003, had lagged developments at its rivals. BGI manages $13bn in hedge funds.
Potential recruits could include individual hedge fund managers with their own funds, teams and proprietary traders. State Street is working with several recruitment consultants. "There's a lot of hedge fund talent on the streets at the moment but equally as many institutions, like us, looking for managers," said Woods.
State Street hired Yacine Bechikh, a hedge fund manager, to develop derivatives-based, volatility and correlation arbitrage strategies in September. He was previously head of equity derivatives research and head of fixed income and foreign exchange quantitative strategy at BNP Paribas.
Woods said performance in U.S .hedge fund strategies was neutral last year, good in Europe but poor in Japan. He said: "We're seeing a lot of demand from U.S. institutional investors to deliver alpha in one package, so the multi-strategy capability is the main strategy we are working on." The multi-strategy offering is due to launch at the end of the first quarter.