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Year of the Horse is a good time to move into a China hedge fund

Horse over the hedge

If you have been thinking about making a switch to a hedge fund in Asia, the omens augur well to make the move in 2014 – the Year of the Horse in the Chinese zodiac – with this alternative investment class posting its strongest gains in November poised to continue performing strongly, at least in the early part of the coming year.

Data provider eVestment reported last week that China funds were up 3.6% in November, bringing their year-to-date performance to just over 16%. It says the mainly long-biased equity focused funds do well when China’s CSI 300 index – the stock market index designed to replicate the performance of 300 stocks traded in the Shanghai and Shenzhen stock exchange – is in positive territory.

A move into long-only hedge funds is being seen as a good alternative for bankers whose job prospects have been curtailed by cost-cutting, or for quants whose performance has been lacklustre more recently.

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Marc Burrage, Regional Director of Hays in Hong Kong, says that there has been job growth in the hedge fund sector in recent months, particularly in Shanghai in anticipation of restrictions on foreign investment being eased.

This is echoed by to Jack Liu, a specialist financial services consultant at Morgan McKinley in Shanghai, who also says there has been a lot of interest from Chinese nationals working in Hong Kong, but wanting to return to Shanghai in the coming year.

Michael Page has a more muted view on the market outlook for hedge fund jobs, with Richard King, MD of Michael Page in North and Eastern China saying there is more “hype and hope” than reality at present, “…linked with the new Free Trade Zones in Shanghai and Hongkou that are supposedly becoming the new ‘hedge fund districts’ but we haven’t seen this translate into demand for hedge fund staff yet.”

His Hong Kong counterpart, Kirstin MacLaren, director of financial services at Michael Page, says most of the hiring is focused on replacement roles as hedge fund firms look to strengthen their back office functions.

Burrage says Hays is seeing demand for candidates mainly for analyst and project manager roles, as well as support functions. Liu says portfolio managers are also needed, and – as teams grow – IT and risk operations specialists.

The focus on Chinese equities combined with location means that Mandarin speakers are preferred. Burrage says the CFA is always appreciated for analysts and Hays has seen a noticeable increase in the number of native-Mandarin speaking candidates with, or on route towards, this qualification. However, just over 3,000 of the CFA’s 110,000 members work for a hedge fund, and over 2,000 of these are based in the U.S.

Like Burrage, Liu indicates that the CFA is a nice-to-have plus, but not essential. “More importantly, employers prefer candidates who possess strong quants modeling skills and a solid track.  For some junior roles, those who graduated from top schools and have science and/or engineering degrees are their favourite choices of candidates.” 

The good news for would-be China hedgies is that salaries are very competitive, with performance-related bonuses that can equal annual pay. But, warns Liu, the workload and pressure are much higher too.

Michael Page’s MacLaren says pay in Hong Kong is very competitive on the buy side, and more so from a total compensation perspective. “If a fund is performing well, we see some candidates receive a high bonus, which is increasing budgets to attract quality talent.”

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