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Morning Coffee: The new rule for joining hedge funds. BofA’s equities professionals punished horribly

Choose the big one

Choose the big one

Next time a job comes up with a vibrant young hedge fund with $70m (and growing!) in assets under management and a Kees van der Westen coffee machine in the reception area, don’t take it. The job, and fund may not last.

So says a new hedge fund study by Citi. Citi surveyed 149 hedge fund firms and came to the conclusion that those with less than $100m in assets under management are in trouble. “Poor performance will be most acutely felt by small hedge fund firms,” says Sandy Kaul, global head of business advisory service at Citi. “These funds simply did not generate enough performance-fee revenues in 2014 to cover their gap.”

Worse, it seems that hedge funds are having exactly the same problem as investment banks Share on twitter Share on twitter. – In 2014, Citi found that hedge fund compensation declined in all areas except compliance. The problem is that hedge funds have become just as unwieldy as investment banks, as shown by the average hedge fund org chart below, taken from Citi’s report. Moral of the story? If you want to join a hedge fund, join one that’s big enough to pay for all this stuff.

Hedge fund org chart

Separately, Bloomberg is reporting that Bank of America has cut bonuses for its equities traders by, “up to 10%.” This looks a little unfair given that revenues in BofA’s equities business only declined by 1.8% 2014. However, it appears that the bottom line disappeared faster than the top line: BofA’s global equities chief reportedly prepped his team for disappointment by informing them that revenues failed to keep pace with the growth in expenses in 2014.

Meanwhile: 

Deutsche Bank’s traders are having a fine starting to the year. (Bloomberg)

Deutsche Bank’s equities traders had an excellent fourth quarter: revenues rose 35% year-on-year, compared to a mere 10% at US banks. (FastFT)  

Deutsche Bank has a 16% return on equity target for 2016. Last year it managed a post tax return of 2.7%. (Financial Times) 

BNP Paribas has put several senior bankers at risk. (Global Capital) 

SocGen closed its CMBS business in 2008 but has just opened it again and hired 10 people (from RBS). (Global Capital) 

Spokesman for US private equity fund has a tantrum upon being fired. (Reuters) 

The ECB has informed banks that it will be thoroughly examining their policies with regards to variable pay during 2015. (Financial Times) 

There is little point in working at three in the afternoon. (HBR) 

 

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