Funds of hedge funds hire in equity researchers

Marc Rubenstein's exit from Credit Suisse to Lansdowne Partners confirms hedge funds' appetite for top equity researchers. But recruiters say funds of hedge funds offer the broadest array of opportunities for restless research talent.

"There is an awfully big call for hedge fund analysts to work in fund of funds right now," says Tyrone Ballantine, a consultant at recruitment firm Finance Professionals. "The ideal candidates are equity researchers with a financial institutions background. But funds will also hire newly qualified ACAs and train them into the role."

After making redundancies earlier in the year recruiters say the likes of Financial Risk Management, a global fund of hedge funds with around $12bn in assets under management, are in an optimistic mood and hiring again.

Potential regulatory changes are adding to the exuberance. The Financial Services Authority (FSA) will publish a consultation paper in the first quarter of 2007 looking at whether to allow funds of hedge funds to market directly to retail investors. Although it's still early days, Ballantine says funds are hiring in anticipation of a favourable outcome.

Recruitment is coming from another source too. Funds of funds typically hire researchers to identify the best hedge funds to invest in. But some are also developing independent equity research teams to work with outside investors.

Blue Oak Capital, a London-based fund of hedge funds already has an independent equity research offering. With the equity research divisions of large banks under pressure following the introduction of unbundling regulations, Ballantine says other funds of funds may yet go down the same route.