More alternative investment firms are following in the footsteps of investment banks by going global. That's creating opportunities for professionals with experience in special situations and event-driven investing, and for people with ties to hot Asian markets.
"If somebody can speak Mandarin fluently, it's a nice little ticket," says Alison Seanor, New York-based senior vice president at Glocap Search, a recruiting firm for private equity and hedge funds.
Another recruiter, who asked not to be named, said a fund based in New York is searching for an equity analyst who will work out of its Turkish office, covering emerging markets within Europe, Africa and the Mideast. Another fund, based in Hong Kong, has created an opening in New York as part of building a distressed debt investing business - a sign that hedge fund globalization is also creating jobs in the U.S.
Hedge funds have run global portfolios for many years. What's different now is that more are extending their roots by locating permanent staff in countries or regions beyond their geographic home, headhunters say.
Alternative investment firms are basically mimicking investment banks' global character "because that formula works," says Sanjeev Sharma, a recruiter at Michael Page International. "You have to be on the ground to be able to capture the best ideas, talk to the right people, access the right networks."
Some U.S.-based firms are trawling for people with a Wall Street pedigree to lead moves into China, India, the Middle East or other emerging markets. At the same time, a number of hedge fund companies based in Europe and Asia are expanding their existing operations in the U.S., creating openings here.
Focus on Asia
"In the past year, Asia has been the largest growth area for us," accounting for at least a dozen searches on behalf of U.S.-based fund firms, says Seanor. "It's not just the big Citadels of the world," she adds. Many fund companies managing $1 - 2 billion focus on Asia.
Seanor says the bulk of these openings are concentrated in distressed securities, real estate, or special situations. In late September Glocap was working to fill slots in China, Japan, Australia, and India for U.S. clients operating in the region.
To be sure, some employers recruit local talent when adding headcount in Asia. Local hires cost less, are more familiar with local laws and business structures, and will likely be better connected in their region than an expatriate, says Tom Robson, London-based executive search consultant at Selby Jennings.
But when establishing an initial presence in a foreign market, Sharma says, "There is something to be said for having someone that's trained by the institutional community in the U.S." running the show. A local hire in the top slot will be less marketable than an alumnus of Goldman Sachs or a top private equity firm, he says. "The funds that are branching out are pretty eager to find U.S. talent that's able to go out there and develop the business."
The largest banks in Europe, Japan and the U.S. organized themselves along global lines more than a decade ago. Among the reasons why hedge funds are following suit:
Evolving Portfolio Strategies
Today's most popular fund investment strategies - special situations, event-driven, distressed, and funds that focus on a single emerging market country - involve exposure to relatively illiquid instruments. By their nature, such strategies place a premium on having staff located where portfolio companies have their headquarters or principal operations.
Traditionally, hedge funds covered emerging markets, and even developed markets, from a distance. But no matter how much jet fuel a London- or New York-based portfolio manager burns visiting portfolio companies, transit time inevitably limits the frequency of trips to Vietnam, China or Indonesia. "But if you're based in Hong Kong, it's just like flying to California" from New York, Sharma says. "You can just do it and fly back home the next day."
Hedge fund assets are flowing to the biggest players. As they mature, these behemoths reach a point where they find it cost-effective to adopt a global approach. What's more, a physical presence in a country helps attract assets from local investors.