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In association with Hedge Fund Intelligence |
A decade ago, it would have been doubtful that many students – if any – from top universities around the world would have been contemplating a career in the hedge fund industry when they graduated. Back then, hedge funds would have been regarded by most as a pretty small and insignificant cottage industry – very much a sideshow to the main action in the financial world, and on the wilder fringes too. Most students contemplating a career in finance would have been looking for opportunities at the big institutional firms in banking, broking or asset management – if they were keen to avoid other mainstream professions such as accountancy or law – and would hardly have given a second thought to the idea of a career in the “cowboy” world of hedge funds.
A decade later, how things have changed. Indeed, just how much they have changed was emphasized to me by a top-quality event put on in London this January by the student union body of the London School of Economics. This was only the second year the LSE student group had held its own Alternative Investments Conference – including a day each on hedge funds and private equity. But applications for the 350 spaces available to attend the event at the Connaught Rooms in Covent Garden were heavily oversubscribed – with many students signing up to attend not only from LSE itself but also from other leading universities in the UK such as Oxford and Cambridge, plus many from elsewhere in Europe, from Asia and from the US.
What also impressed me was the heavyweight support that the LSE student group attracted from the industry. Leading sponsors included Man Group, the world’s largest listed manager of alternative assets, and Liongate Capital Management, the high-performing fund of hedge funds group headed by Randall Dillard. Also among the leading backers of the event were top European equity hedge fund groups Lansdowne Partners and Marshall Wace Asset Management.
A particular coup for the organizers was to attract as a keynote speaker Anthony Clake, one of the partners at Marshall Wace and widely regarded as a key architect of the firm’s innovative Tops (trade optimized portfolio system) process for managing money in the equity markets. Largely in recognition of his work on Tops, Clake had been made a partner at Marshall Wace in 2004 at the tender age of 24 – and thus had plenty to say of interest to ambitious students keen to make a similarly quick impact on the hedge fund world. (Unfortunately, comments could not be reported for the record but I can confirm that Clake did give the students a generally positive view of the industry – as a very meritocratic business, where it is indeed possible for people of genuine talent and from whatever background to make a quick impact).
Of course, 10 years ago it was not really possible for many graduates to get a first job in hedge funds even if they had wanted to – simply because the industry was still so small. And most of the people that have arrived in hedge funds since then have typically served a long apprenticeship first – on either the buy side or the sell side of the mainstream asset management world. The world of hedge funds today is of course filled with teams of people who worked together previously at big institutional firms.
Today the hedge fund world is suddenly a lot larger, with many bigger firms – mini-institutions – of its own. Events like the LSE conference are indicative of the fact that the bigger hedge fund firms are increasingly reaching out to recruit talented graduates directly – in competition with the big banks and mainstream asset managers.
Hitherto, this trend has been probably been most apparent among the intensively research-focused firms in quant asset management. Firms such as Renaissance Technologies in the US as well as quant-focused firms such as Winton Capital and Ikos Partners in Europe have become justly renowned for the army of mathematicians and rocket scientists – many with PhDs – that they have attracted to join their ranks in recent years.
Few leading firms have as yet gone so far as to create a formal graduate recruitment programme. But the presence of more fundamental equity shops such as Lansdowne and Marshall Wace at the recent LSE event demonstrates that such a development is now beginning to gather steam across the industry – and arguably becoming an important new front in the continuing war for talent that drives the hedge fund business.
It is still, of course, relatively early days in this process. At the closing session of the conference, which I moderated, my panellists generally agreed that for most students contemplating a career in hedge funds, it is still probably better to go and work at a bank first. But it is no longer the only way to go.
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In association with Hedge Fund Intelligence |
