Now May not be the Best Time to Become a Hedge Fund Trader

A while ago, when we asked people what they’d rather do if they weren’t working in an investment bank, the verdict was clear: they’d rather be working in a hedge fund. Forty-four percent of our respondents said they aspired to a career in a hedge fund or private equity. Unfortunately, hedge funds are cutting their trading budgets. They’re not hiring. They’re firing.

Zoe Cruz isn’t the only big name banker to have tried and failed as a hedge fund manager. George Soros and Carl Icahn have both wound down funds this year, as have numerous lesser-known names.

According to a report released by database provider Hedge Fund Research, 232 hedge funds reported shutting down in the U.S. in first quarter of 2012 - the highest quarterly liquidation total since the first quarter of 2010 when 240 funds shut down.

Around 250 hedge funds closed in Europe last year according to Eurekahedge. At the end of 2011, Credit Suisse said 67% of hedge funds globally were below their high-water marks and that 13% hadn’t earned a performance fee since 2007 – meaning their employees wouldn’t be paid bonuses.

In total, Eurekahedge estimates that around 800 hedge funds have closed in Europe since 2008. That leaves a lot of formerly employed hedge fund managers sloshing around the market. Many of them are very wealthy, but many of them still want to work. In a contracting market, that leaves a lot of very highly qualified candidates chasing a shrinking pool of jobs.

“I’ve never seen such an imbalance of talent,” says David Durham, managing director of hedge fund headhunters Durham Consultants. “A lot of experienced traders out there are trying to get jobs – there are a lot of people who’ve made a lot of money and would like to still be working, but who can’t find anything that’s suited to their level of experience.

“A lot of those people are now happy to work for someone else,” says Durham, “but the attitude can often be, ‘Sorry – you lost, we won.”

Nevertheless, there is some hiring in the U.S. hedge fund market. We have ten trader or trader support positions on our site.

A headhunter who recruits traders for hedge funds says Millennium, BlueCrest, Capula and distressed funds like Oaktree are all recruiting in London. Pimco is also hiring distressed debt professionals in Europe, he claims.

Hedge fund headhunters vary in their opinions as to where the hiring is taking place. One senior recruitment at an international search firm says he’s actively placing credit and macro risk-traders, as opposed to execution-only traders. Durham says he’s seeing a lot of demand for, “short term and medium frequency traders.”