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Fund management jobs suddenly look a lot less safe

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.”

Comments (14)

  1. How about a happy story for a change?

  2. This is not a Hollywood movie…this story does not have a happy ending.

  3. Another day, another negative news article from Efinancial.

    If the financial markets are going to turn around then the media need to stop falling on every piece of negative news and try to offer some balanced reporting.

    Lets not forget that the value of shares can go up as well as down and fund managers can improve their fees by out-performing the benchmark. Also fund managers look at the market in long term.

    Outside of the Banks we have not see large corporates failing ….. or pension funds deciding to do something different with their money !

    With respect to Henderson – they do have a pretty big exposure to CDO. To even the most casual observer Schroders share price moves like a yoyo in a good market … today they finished up 32.35%.

    So pretty please …can we have some positive stories on this recrtuiment web site. Perhaps a movers and starters section might add a ray of light to an otherwise overcast community and remind readers (ie recruiters and job hunters) that there is some positive sories out there.

  4. forget the positive news… the Butcher likes blood too much

  5. Buysider and CJames,

    We do have stories that are both positive and happy. Last week we had some that fell firmly into this category (Eg. ‘Where the guarantees are’ and ‘Where to sit it out’ – which offered advice on robust sectors) plus several that erred on the side of positivity (Eg. ‘It’s ok, you can work in renewables’ and ”Your government needs you.’).

    Re. this particular article, although Schroders’ share price recovered 32% today, it remains down around 40% on this time last year. Overall, fund performance fees are unlikely to offset the decline in AUM – where they exist, these fees are usually offered only after the fund has reached a high water mark.

    Due to the combination of this article and the CEBR report, today was unfortunately a negative news day. That’s sometimes how it happens. Tomorrow, we are leading on a positive story and we will endeavour to produce positive stories thereafter – unless reality intervenes.

    Sarah, Editor, eFinancialCareers Reply
  6. I don’t think you can just blame the media for the continual bad news. Look at the statements that hve come out of the IMF over the last 5 days. nearly every single word has implied that the global economy is about to implode, even as governments were trying to restore confidence. By Sunday I was just thinking, `will you just shut up!!!’; but no, they jsut kept on with the negativity.

  7. Bad news keeps journalists in jobs. There’s a downturn in the economy and it’s not going to turn up because of a record rise in share prices. I’ve seen pictures in the press of grinning/smiling traders (or anyone sat near a screen called a trader!). That’s as good as it gets.

  8. I think everyone is aware that a downturn is coming / we are in the midst of one. I think that the fear that was driving down the markets which meant fundamentals were being thrown out of the window and momentum driving everything may have calmed down now and the financial meltdown being predicted averted. In that light a “mere” recession seems like almost good news!

    RE Schroders, whilst it may be down on last year, so are most stocks. Trading at about 900p yday, it is not far below its average for 2008 of about 1000p, and yet until this month AM jobs were thought to be safe. The people that redeemed on Friday must be hitting themselves!

  9. Thanks for the comments Sarah. Accepted that Journalists are not to blame totally – however they are also not helping much either !! Not wishing to tell you how to do your job but I do think that at times the editorial content of this recrtuiment site could perhaps be a bit more positive. As my job is not to sit on websites and join chat rooms I am going to need from refrain from reading any more of these debates. Instead I will be making a concerted effort to get out there and make things happen for the people I am working with. My closing thoughts on this though are that this is not a News web site but a a Recrutiment web site with a bit of a manopoly on the market. There also seem to be a lot of lightwight contributers to these debates.I am guessing mainly junior recrtuiers sitting in agency offices wandering what to do next with their lives or unfortunate individuals who have recently been made unemployed. To put it succinctly I think efinancial could do a better job of not alienating themselves from the people that pay for this web site. Here ends the lecture.

  10. a fundamental rule of life is that what goes up must come down. Fund management is based on assets (mainly stocks) going up. Why is everyone shocked when assets go down in value?

  11. Hi buysider,

    I don’t want to dissuade you from commenting on posts – we need high calibre recruiters with an informed view on events to give their perspective. Nor do I want to alienate our clients. However, we do want to offer a realistic portrait of what’s happening in the job market – without this our editorial offering would not be credible and would not encourage candidates to come to the site. Feel free to continue the lecture at editor@efinancialcareers.com if you feel inclined to!

    Sarah, Editor, eFinancialCareers Reply
  12. Most fund managemnt houses are overstaffed with high overheads, a rout of the dead wood is needed.

    Herman Grunwald Reply
  13. Blaming journalists for the current negativity in the market is like blaming the thermometer for indicating that a person is running a fever. Journalists cater to what sells. If people are in a mood to read/listen/watch negative stories then so be it. If you have a cancer then not talking about it and pretending to be happy will not cure the cancer, it will make it easy to bear the pain if you have a positive attitude but not cure.

  14. journalists in finance rarely rarely understand what they are talking about. look at how badly explanations on CDOs etc a few months ago on the news were. Lack of experience and kowledge always results in over reacting by the press, which spreads panic everywhere else. I think there should at least be a qualification to take to make sure financial journalists have a minimum amount of knowledge, like teh FSA exam etc. These guys are in a powerful position yet dangerously know very little.

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