So you want to work in ETFs? You'll, unfortunately, be lucky
ETFs are where it's at. With a compound annual growth rate of 81% in Europe over the past decade and with growth of 31% in the past year, they are an increasingly rare example of unbridled expansion in the financial services sector.
Unsurprisingly, expansion has led to signs of hiring. Hence, Citigroup announced last week that it had hired Nick Shellard from Deutsche as head of ETF distribution. Last year, Source, an ETF provider started in 2009 with backing from Goldman Sachs, Morgan Stanley and BAML increased its staff levels by 80% and said in January that it's 'rapidly expanding' its workforce this year too.
Surprisingly, however, recruiters specialising in ETFs say there's not really all that much going on.
"Anyone who says there's a lot of hiring in the ETFs space isn't telling the truth," says Chris Sevenoaks at recruitment firm the Emerald Group. "The honest truth is that this is a passive investment product and you don't really need a great deal of people to operate in the space."
Staffing levels at Source confirm this. Although the fund has $8.5bn under management, it only employs 28 people. Last year's 80% increase in staffing therefore refers to recruitment of 15 people.
Much of the staffing for ETFs relates to sales. At Source, for example, there are 14 sales staff versus 4 product specialists and two data analysts.
However, the enthusiasm for ETFs isn't translating into sales hiring either - especially in banks. "Comparatively new entrants to the market like Citigroup are tending to spend 500k to bring in two or three senior individuals who can educate the existing distribution salesforce on how to push ETFs," says one recruiter. "It's much more about using existing institutional sales staff, or wealth and retail arms, to push ETFs than it is about hiring specialist sales staff."
Roy Zimmerhansl, a consultant in ETF financing, confirms the dearth of new blood. "It's pretty much all the same people as four or five years ago. Although this is a big and growing area, there aren't that many people being sucked into it."
Key job categories in ETFs
1) Sales Selling ETFs to institutional or retail investors. Possible background in equity derivatives or equity sales trading. Need an established client base.
2) Sales strategy Writing strategy documents and marketing material for the sales team.
3) Product developers Includes operational roles coordinating other staff and doing all the due diligence and corporate governance work that precedes a product launch, and the actual structuring of the ETF. Usually involves people with previous experience working with highly liquid equity derivatives.
4) ETF traders ETF trading is mostly undertaken by algorithms so traders tend to be quants and - in investment banks - are often from a swaps or securities lending background.
5) ETF portfolio managers Slightly boring job usually involving little more than FX hedging and twice daily portfolio rebalancing. Usually have a quant indexation background.