For a long time, the buyside was relatively immune to the tribulations of the banking sector. As of last week, that’s categorically not the case. With more than $25 trillion wiped off global equities in 2008, fund management fees are diminishing along with their assets under management. UK fund managers are likely to be particularly impacted by the equities rout – according to Mercer, around 60% of their assets are held in equities as against 50% for funds elsewhere in Europe.
Fund managers’ problems haven’t gone unnoticed. Last week, shares in Schroders lost 25% of their value after Citigroup analysts reiterated their sell signal and said investors would inevitably redeem their assets. And shares in Henderson plummeted 18% on Wednesday after the company said it would be unable to meet its profit target.
Henderson is said to be readying itself for further staff reductions after making 44 redundant in February. The Financial Times today reports that Fidelity is cutting 200 jobs, following in the footsteps of Aberdeen Asset Management and New Star.
It’s bad news, not only for people working in fund management, but also for jobless bankers, who earlier this year were able to walk into re-employment on the buyside.
“Until now, funds have cut from the middle and back office and tried to avoid the front office teams, which in any event tend to be fairly lean,” says Martin Lorigan at headhunter Principal Search. “But, with the stock markets at their current levels, it looks likely they will have to start reducing headcount within those teams as well.”
“We are definitely going to see fund managers reviewing their headcount,” says another headhunter, who wished to remain anonymous. “Everywhere is now affected.”