The fund management industry has not been immune to the wave of job losses that is poised to sweep the banking industry globally.
Year to date, overall hiring of investment professionals in the UK has fallen by 61 per cent in fixed income and 26 per cent in equities over the same period last year, says Rupert Reed, senior partner at asset management executive search firm Godliman Partners.
“Ironically, even though hiring volumes have fallen, most executive search firms are pretty busy,” he explains.
In fact, most of the staff reduction has been at the mid level, whilst the majority of hiring is focused on senior critical hires, which represent the head-hunters’ core area of expertise.
“Most asset management firms are today looking for what I would call game changers,” says Mr Reed. “These are very experienced fund managers, with a proven, consistent track record. They must have strong understanding of risk budgeting and risk control, a solid reputation in the market, people and communication skills, and be able to make an immediate difference to the business.”
Fund management firms are clearly trying to reposition themselves in a difficult market. “I think people are either upskilling their existing teams or breaking into new product areas,” he adds.
Having a very strong retail profile clearly helps, but equally managers can have a strong institutional profile and be completely unknown to the public, says Mr Reed.
The types of investment skills in demand have also changed greatly.
Before the crash, investors were looking for managers who could generate excess return to benchmark. But in this much more volatile, possibly even bear market, there is now a trend away from benchmark investing in favour of total return.
“The new buzzword we come across a lot is ‘go anywhere’ investing, where you may be investing in multi assets, anywhere, any asset class, any geography,” says Mr Reed. “The key is that you have got to get the return.”
The focus has equally moved away from just looking at the return to how that return was generated. “Risk control and risk budgeting is now a central skill for the portfolio manager,” he explains. “You have got to be able to deliver consistent returns over time – it is no good giving 15 per cent return this year and -25 the next year.”
Hiring managers is complicated today because there was a massive dislocation of track records. There are hardly any fund managers now who have got a consistent performance over five years. Those fund managers that were doing well before the crash have done quite badly afterwards and vice-versa in many cases. “Also, because of the market crash, a lot of people have re- engineered their process, so it becomes much more difficult to identify people who tick all the boxes,” says Mr Reed. Hence the ones who do, are very much in demand and are also very well paid.
One may wonder how the past few years have affected fund managers’ confidence.
“Generally fund managers are a very confident bunch,” says Robert Farago, head of asset allocation at Schroders Private Banking.
“But perhaps what’s changed is that they put more emphasis on at least having an understanding of the macro-environment we are in. Across the board, in the past there were managers who ignored the macro entirely, who always thought of themselves purely as stock pickers.”
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