Scottish asset managers eyeing expansion once again

After a period of relatively subdued growth, this year is shaping up to be one of expansion for Scotland's asset management industry.

While much of the focus for Scotland's asset management firms last year was on the middle office, or building functions like performance measurement, they're beginning to recruit for front office positions going into 2011.

In the final quarter of 2010, hiring started heating up in the Scottish asset management industry. Scottish Widows Investment Partnership, for instance, told us that it added 108 people last year - or around 25% of total headcount - and has taken on additional HR professionals to handle the levels of recruitment.

"It was a hectic final quarter for recruitment at SWIP and we don't see this changing going into the new year," says Lynne Dalgarno, director of HR at SWIP. "We currently have 70 vacancies across all areas including emerging market and global equities, as well as middle office and operational functions."

But is this sentiment shared across the board? In its quarterly outlooks last year, Ernst & Young's Scottish Item Club suggested that asset managers north of the border were "treading water" when it came to front office recruitment.

Sentiment has definitely turned more positive on the back of a solid 2010, suggests Colin McLean, managing director of SVM Asset Management in Edinburgh.

"There has been a bit of movement, in particular Scottish asset managers looking to build their capabilities in global and emerging market equities," he says. "However, there's also been something of a retrenchment from UK equities, so it's not expansionary across the board."

There is, of course, the danger of something of a talent crunch. Traditionally, Scottish fund managers have looked to recruit from the local market, so is there an imperative to look further afield if expansion is on the cards? Delgarno believes so.

"Generally across the industry during the final quarter of 2010, there were a number of unsettled people looking to move and many fund management firms in Scotland opportunistically pounced on that opportunity," she says. "However, a lot of our recruitment has been from outside Scotland - either Scots returning home, or people making the lifestyle choice to move away from the City."

This is on the back of positive sentiment around the fund management industry in the UK generally, with the latest CBI/PwC Financial Services Survey suggesting employment numbers are on the up in the sector.

Pars Purewal, UK asset management leader at PwC, said: "Volumes of business, profitability and numbers employed have all increased. Due to the strong quarter, the sector is now looking to invest in distribution and develop new products and services.