Brexit has not killed front office recruitment in the City of London, but there's one common theme - people are trying to leave big investment banks.
Banks’ traders are increasingly trying to escape into hedge funds, while M&A professionals are either clawing their way towards private equity or willing to accept jobs at lower tier organisations.
Average applications to hedge fund jobs in London are up by 43% for the first four months of 2017 compared to the same period in 2016, our figures suggest – the largest increase of any sector. In January this year there were 117 people chasing every job, our figures suggest, compared to 65 applications in the first month of 2016.
“A lot of this is wishful thinking,” says Jason Kennedy, head of hedge fund focused headhunters Kennedy Group. “More people are applying from banking, but most of the time hedge funds only hire from other hedge funds. 80% of applications are irrelevant.”
Hedge funds have been struggling – average performance last year was 5.6%, according to Hedge Fund Research, compared to a 12% return on the S&P 500 – but job numbers have largely held up over the course of the past year at an average of 133 open roles per month. Still, our figures also suggest large investment banks are not hiring any more traders. Despite a good first quarter for most investment banks, the number of people applying for each available trading job remains flat on 2016 for the first four months of this year. Meanwhile, in spite of an uptick at the tail end of 2016, there are still fewer trading jobs available now than before the Brexit vote in June last year.
Job numbers in private equity, meanwhile, have barely budged since the beginning of 2016, with over 200 live jobs every month over that period. But average applications per role are up by 13.3% when comparing the first four months of 2017 to the same period last year.
“Brexit has done two things,” says Gail McManus, managing director of Private Equity Recruitment. “It’s made senior people less likely to commit to the UK in the long-term, and consider roles in the EU. And it’s made more people apply for entry level roles from investment banks – even if their chances are not any better.”
In other words, Brexit has made the buy-side even more aspirational – but hedge funds and private equity funds are unwilling to bend on who they take on.
M&A jobs are also more competitive, however, with applications up by 22% year on year. Large investment banks are already starting to shift jobs out of London because of Brexit, and so the big difference in 2017 is the lack of roles within bulge brackets, says Andrew Pringle, director of M&A focused recruiters Circle Square.
“Bankers with experience at top tier banks usually only want to move to other top tier banks,” he says. “Now, the big banks are not hiring, everyone is a lot more flexible. It used to be that only 10% of the applicants were any good. Now, there’s a huge pool of talent on the market.”