When the going gets tough, the tough start hedge funds.
Canadian Hedge Watch, a trade publication, is increasingly hearing from financial professionals eager to strike out on their own, says Daryl Ching, a company vice president. "We are seeing a high volume of people trying to start hedge funds," he tells eFinancialCareers News.
These budding masters and mistresses of the universe are counting on support from their friends and families, along with whatever they can scrape together from their severance packages.
Unfortunately, Ching notes, a wannabe tycoon will likely need more money - quite a bit more. That's a hurdle many will find difficult to clear.
"The biggest challenge right now is raising capital," he says. "You better have a unique (angle). Just trying to launch a long/short equity fund is not going to happen."
Breaking into Canada's hedge fund industry isn't easy. It's not large: There are only 70 corporate members of the Alternative Investment Management Association of Canada. Ching estimates about there are 400 hedge funds in the whole country.
Only 4 percent of Canadian hedge funds have assets of more than $5 billion. Thirty percent have assets between $10 million and $49 million, according to hedge fund analyst Richard Wilson. Worldwide, he notes, hedge fund employment has dropped because of industry consolidation.
"Yes, there are jobs in the Canadian hedge fund industry," Ching says. "Most companies are quite small in size. Anyone looking for a portfolio manager jobs is probably out of luck unless they start their own funds."
The jobs available tend to be in sales and compliance. To maximize their profit potential, many firms keep costs down in areas such as personnel, so major hiring isn't in the cards for a while, Ching says.
Stirrings in Mutual Funds
Meanwhile, Canada's mutual fund industry is also showing signs of life. March data from the Investment Funds Institute of Canada shows "industry asset growth was very strong ... as fixed income and equity markets both at home and abroad performed particularly well."
Canada's mutual fund industry has lost 700 to 1,000 jobs since last September, mainly in areas like fund accounting and marketing, according to Dennis Yanchus, the association's manager of statistics and research. He points out that jobs continue to be posted on the organization's Web site in areas such as compliance.