Coming to Asia to work in a hedge fund? Stay at home!
18 Oct 2012
There's enough supply of staff to keep Asian hedge fund rosters full, and even in Asia, the street has no shortage of senior professionals out of work and keen to get back in.
It's fair to say there are fewer hedge fund jobs this year than there were last year., or at any time since 2008. While some high performing funds have increased in size, they keep a close eye on headcount and don't make hiring decisions lightly.
Relocating to Asia is especially attractive for Europeans, because unlike for Americans, there isn't global taxation and so Asia's low tax rates are very attractive. However, it won't be easy if you haven't worked in Asia, or have friends who can put in a good word for you to be hired as their new colleague.
Matthew Hoyle, founder of hedge fund recruitment specialists Matthew Hoyle Financial Markets, says: "It helps if you are known in the hedge fund and can have some person to vouch for you. If you are some random person and are not in Asia, forget it. You won't get hired. If you're in Europe, stay in Europe.
"You need to be able to contribute something, You don't have to be a jack of all trades, but frequently have to be a master in more than just one, because you will often be expected to play back up for other people."
For example, being able to trade more than one asset class is useful, such as a convertible bonds trader who can back up for the volatility trader and be able to keep an eye on that book. Also an equity researcher will be more attractive for a hedge fund if he can show he has a reasonable command of fixed income instruments as well.
It is also easier at the lower end of the market. Solid operations people and good fund accountants are always in demand. So for example, if a Chinese fund accountant was currently based in Canada, the Asian industry would find a place for him.
Compared with the rest of the world, Asia's talent pool is quite small, so when the market goes up, there aren't enough people to fit the jobs, and it results in salaries being bid up. Then, if a person is found in Europe on a significantly lower salary, it becomes a more attractive proposition to relocate him.
In general, hedge fund staff aren't expecting high bonuses this year. Asset classes are too correlated and volatility, which hedge funds thrive on, is low, meaning funds need to take a lot of risk in order to capture a small move relatively speaking. That makes for a difficult environment for hedge funds, so people aren't going to get highly paid, and that means that funds don't need to turn to Europe for staff.
On the sell-side, salaries have retrenched after having risen after the crisis. Firms slightly regret that largesse and they may sack you, but in some cases a member of staff is allowed to remain in the job but for a lower package. Basically you have to interview for your own job. 2012 bonuses in banks are something of a moor question as even if you get one, such a large proportion will be in deferred cash or stock.
People have been laid off in banks in the last two months, something that often seems to happen this time of year. Is this a rationalisation of the bonus pool, so that what's left has a smaller number of recipients?
"The people who are still there would say so and I think there's truth in that," says Hoyle. "We're seeing a lot of CVs from bank executives when lay-offs are announced. The trend is to get rid of a senior MD who has been there 15 years, and replace him with two associates who are cheap and will work harder, albeit they aren't rainmakers and won't pull deals in - though of course there aren't many deals anyway."
The people who are laid off will find new jobs with great difficulty, and furthermore the financial services market is shrinking faster than hedge funds are growing. Those discarded are joining people out of work on the street who were laid off last year and still aren't back in harness.
"If they haven't found work in the industry after a period, they should consider going into another industry," says Hoyle. "Though I hear some are heading off to places like Thailand where they can live cheaper and wait until the storm passes. If you're not back within a year though, your chances of getting back diminish considerably. After two years, it's even more of a stretch. Three years, forget it. It's impossible, you've retired."
Author: Simon Osborne