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Morning Coffee: This is why people really want to move to the buy-side. 40-something hedge fund manager's curious claims of "integrity"

Despite some misconceptions as to what's actually involved, buy-side careers (in asset management )are enduringly popular among people disaffected with the sell-side (investment banks). If nothing else, this can be put down to the pay. Pay in the more desirable areas of the buy-side appears to be increasing. Pay in almost every area of the sell-side is doing the opposite. At least this is the expectation.

Take hedge fund managers (on the buy-side). New York search firm Odyssey Search Partners surveyed 500 of them and found they were expecting a 39% pay rise this year.  The average hedge fund trader thinks he or she should get a bonus of $562k for 2017. The average hedge fund sector head, partner, or portfolio manager thinks he should get $1.4m (a rise of 79%). In private equity, principals are expecting a more modest rise (9%) to a more modest $355k, but this is expected to be accompanied by payment of carried interest worth $3.2m every five years - ie. $640k a year.

The buy-side pays. Or at least people working there think it will. The sell-side, not so much.

The annual sell-side compensation survey from search firm The Options Group highlights the discrepancy. Based on "thousands of interviews" with people in investment banks, its findings are not pretty. This year's prognoses are displayed in the chart below. They say that instead of a pay rise, most people in banking are expecting bonuses to fall this year, many by double digits in percentage terms. Escaping to the buy-side isn't just about becoming an investor rather than an adviser; it's about escaping the rout in sell-side pay.

Separately, hedge fund Autonomy Capital boasts about conducting business with the "highest level of integrity, honesty and performance," but something seems to have gone awry with the personal integrity of its founder and chief investment officer, the ex-J.P. Morgan and Lehman Brothers trader Robert Gibbins. 47 year-old Gibbins (married) stands accused of inseminating a former Miss Germany (now single) after seducing her with promises of an ostrich farm. She says he gave her an STD, exerted pressure on her to have the pregnancy terminated and hired a private detective to follow her about. She's suing him for $15m.


Prediction: Tidjane Thiam at Credit Suisse will be gone by the end of next year. (Financial News) 

Systematic internalisers are coming: "old-fashioned market-making, but within a new regulatory framework." (Bloomberg) 

$150k for a live in "domestic couple" in NYC. (Business Insider) 

Man closes hedge fund after 21 years. "This can be a humbling business." (PIOnline)

U.S. hedge fund that opened in London closes down again. (HFM Global) 

Inside Facebook's Cambridge office: artwork written in binary. (WCVB) 

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AUTHORSarah Butcher Global Editor
  • LW
    19 December 2017

    That's below market for the domestic couple....even with the live-in status. Personal Assistants/Estate Managers routinely get this level as individuals.

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