Candidates cautious as hedge fund performance wobbles

With hedge fund managers shifting up a gear to avoid forfeiting bonuses, those braving the job market are being choosier about prospective employers.

The Times last weekend reported that managers at large funds such as Peloton Partners, Moore Capital and Vega Capital Group, risk losing bonuses unless they raise their fourth quarter returns.

Smaller hedge funds are also in a difficult situation: according to Eurohedge's latest rankings, they are lagging their larger rivals in asset growth. However, Steve Yendell of search firm Selby Jennings says smaller funds are often prepared to be more flexible in their approach to recruiting and retaining staff: "Generous equity options and multi-year guarantees are examples of how they've been tying in senior people," he tells us.

'Smaller and newer fund managers may not be regarded as having the same potential to provide financial stability," says Yendell. "They have to work harder to make the strategic hires they need to deliver success next year.'

Alex Henderson, business manager at Emerson Chase City, says candidates exploring opportunities at smaller fund managers are more adventurous: 'Promised returns may be far more lucrative - but the risks are greater,' he explains. 'It's entrepreneurial types who are most prepared to make these moves."