Hedge funds are losing talent to university endowments, sovereign wealth funds and even to the Securities and Exchange Commission, of all places, according to a survey released this week by executive search firm Heidrick & Struggles.
Hedge funds are losing talent to university endowments, sovereign wealth funds and even to the Securities and Exchange Commission, of all places, according to a survey released this week by executive search firm Heidrick & Struggles.
The trend started during the fourth quarter of 2009 and is expected to continue for the next six months or so, according to Claude Schwab, a partner at the firm.
Indeed, on Thursday, FRM Capital Advisors' chief investment officer Neil Mason left his post at the hedge fund to take over as chief risk officer at Harvard Management Co., which manages the approximately $35 billion endowment of Harvard University.
“These are usually not midlevel people that are making the move,” noted Mr. Schwab. This crop of movers tends to have considerable experience in the industry, and “they're looking around and seeing a lot fewer seats.”
Nearly 800 hedge funds evaporated last year, on top of the 1,500 that liquidated in 2008. Hedge fund hiring this month is down about 40% compared with last year, according to January data from eFinancialCareers.
But competition alone doesn't explain the moves.
Just last month, the co-hedge fund manager of massive Pacific Investment Management Co., Changhon Zhu, announced he'd be leaving Pimco to take a new post as chief investment officer of a Chinese sovereign wealth fund. And in November, hedge fund veteran and author Richard Bookstaber joined the Securities and Exchange Commission as a senior adviser in the agency's division of risk, strategy and financial innovation.
“They're not necessarily going for the top dollar,” Mr. Schwab said. “They're going to a place that's more than just a hedge fund—it's a cause they can believe in.”
It's worth noting that staffers most vulnerable to this change of heart tend to be those who have already established themselves in the hedge fund world and are likely sitting on a small fortune.
“The young associates who have not yet made significant wealth themselves,” Mr. Schwab added, “they're not jumping to go work for the SEC.”
Ms. Potkewitz is a reporter at Crains New York Business, a sister publication to InvestmentNews.
