Volatility traders back in fashion

Volatility traders have been off the radar for hedge fund recruiters. Now they're back on again.

"Everyone is looking for volatility traders," says David Durham, managing director of hedge fund specialist recruitment firm Durham Consulting. "I am seeing a great demand for senior hires, especially in the last month or two."

"If there are opportunities in volatility trading, hedge funds will exploit them," Nicolas Campiche, who heads a group that selects hedge funds for Pictet et Cie clients told Reuters.

Drago Indjic, a project manager at the London Business School's hedge fund centre says "A problem [for some investors] is that more hedge funds are becoming multistrategy and volatility will be just one of the things they trade."

Indjic says there is not enough expertise in volatility trading and there is room in the industry for more pure volatility funds, Reuters reports.

The number of hedge funds that only trade volatility is now estimated at around 10 - a minute proportion of the more than 8,000 hedge funds said to be in existence.

Specialised volatility hedge funds found it difficult to succeed after 2003 as stock market volatility slipped, with many forced to close their doors, but the current market conditions have led to their rehabilitation.