Despite media coverage highlighting investor redemptions and poor performance, data collected by Job Search Digest imply that there are plenty of opportunities to join hedge funds and private equity firms. "There is still a strong flow of private equity and hedge fund hiring. Those doing OK are looking to hire but the number of people applying has diminished," says David Kochanek, president of Job Search Digest, which polled hundreds of hedge fund managers and employees in the US and UK over summer 2008. The reduction in applications could be because people believe there are fewer opportunities and so have ceased looking or because potential candidates are looking outside of alternatives, believing there are safer career options elsewhere, Kochanek says.
The strongholds for careers in hedge funds remain London and New York, with about 80% of the job market, according to Job Search Digest. Connecticut and Chicago bring up the rear. This year’s hedge fund compensation report, however, showed a fall in the average salary at London-based hedge funds. Kochanek says that in Asia there has been less hiring than expected. "The demand for talent in Asia was also affected by the market shift," he says.
In private equity, California and Massachusetts share the limelight with New York and London as employment hubs.
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Source: Hedge Fund Jobs Digest |
In terms of which type of fund to join – after finding one that is doing well, candidates would be best advised to pick a fund that is neither too small nor too big. Average cash compensation among hedge funds grew 4% to $260,000 in the 12 months to September 2008 but funds with assets under management of between $500 million and $1 billion were the biggest payers. "Small funds struggle to build critical mass from a personnel point of view due to management fees not being high enough to cover a large base salary pool but as funds increase in size to over $1 billion AUM, the average pay actually decreased," says the report. Directors are still the highest-paid positions at about $400,000; analysts received about $205,000 a year.
Hedge fund employees seem to be becoming less demanding about salaries. Of those surveyed, 42% said they were satisfied with their present salaries, compared with 25% the year before.
By investment banking standards, "a hedge fund work environment and schedule looks pretty tame" says the report. That said, almost 90% work between 40 and 60 hours a week. The majority of those surveyed claimed to have a good work and personal life balance.
In terms of qualifications, MBAs, while arguably handy to have, are playing less of a factor in hedge fund employee selection. "If you spend over $100k and two years of your life getting an MBA, you will be expecting a high salary to compensate for your investment, and that is not a given," says Kochanek. "If you know the hedge fund industry is where you want to be, it might make more sense to invest time and money sharpening your skills in a financial modelling course."