How investment banks are now poaching from floundering hedge funds
Former investment bankers who moved into the hedge fund sector are increasingly being swayed back to their old vocations in the wake of fund closures.
In theory hedge funds are the place to be. With shaky job prospects in investment banking, regulatory crackdowns on proprietary trading and shrinking pay packets, hedge funds are viewed as a high-paying and safer option. Instead of utilising headhunters, hedge funds are now employing in-house recruitment teams to sift through the thousands of resumes they receive for each role.
But working for a hedge fund can be just as perilous. Last year 904 funds shuttered their doors, according to Hedge Fund Research, which is the highest figure since 2009, with equity and macro strategy firms leading the way in liquidations.
Investment banks have been able to capitalise and, for the first time in five years, it’s not been one-way traffic. “People are still queuing up to get into the hedge funds from investment banks, but we’re seeing more portfolio managers and traders looking to return to large institutions, because of career progression opportunities and perceived safety, rather than monetary reasons,” says one hedge fund headhunter who declined to be named.
While most employees of SAC Capital Advisors’ London office have been hired by competitors like Moore Capital, BlueCrest Capital Management and Millennium Partners, portfolio manager Yasin Youssouf was taken on by Morgan Stanley – his first job in the banking sector since leaving Barclays in 2005.
Meanwhile, former employees of Occitan Capital Partners – the hedge fund set up by ex-Nomura traders that closed in May last year – have been turning up in investment banks again. Alex Capez, partner and portfolio manager for the tail risk fund, joined Credit Suisse earlier this month, while co-founder Herve Gallo and partner Christopher McNally have both been hired by SocGen.
Investment banks have even swooped on hedge funds that just pulled back from certain markets. Brevan Howard closed its macro FX hedge fund in early 2013 and since then Neilan Govender, a senior portfolio manager at the firm, and rates trader Julien Eisenberger, both returned to roles in Credit Suisse’s FX business.
While hedge funds are increasingly picky about who they take on from investment banks, insisting on niche skill-sets and the all-important demonstrable track-record, hedge fund experience is viewed as a plus by the large investment banks.
“In a world where investment banks are relying more on computers, human traders who have proved they’ve made a difference individually at a hedge fund are very desirable,” says the headhunter.