Neglected at bonus time, investment banking risk managers are apparently very eager to work for hedge funds.
Lee Bevan, a consultant at hedge fund specialist Mirage Recruitment, says there's been a noticeable uptick in the number of investment banking risk professionals with a penchant for working on the buyside.
"We're seeing a lot more risk managers saying their bonus wasn't very good and they want to move to a hedge fund," says Bevan. "Last year, a senior vice president in risk at an investment bank might have received a bonus equivalent to 120-130% of their salary. This year it was more like 40-50%."
Steve Yendell, a director at recruitment firm Selby Jennings, agrees there are many miffed people around. "A lot of risk and compliance people in investment banks are unhappy with their bonuses this year. Hedge funds are able to pick up some good guys from banks more easily than they could a year ago."
One of those fishing for staff is Fortress, which added 40 staff in the final three months of last year and fully intends to keep on hiring for its infrastructure, finance and legal teams, according to the Financial Times.
Unfortunately, however, landing a middle office job in a hedge fund isn't easy. Yendell says hiring is slower than it was last year, and Bevan says funds are being choosy as to who they recruit, and subjecting candidates to a lengthy interview process.
Despite the demise of Carlyle Capital, risk may also be no more important to hedge funds now than it was before. "It's generally up to portfolio managers to decide whether their portfolios are robust enough to meet liquidity requirements," says Alex Allen, chief investment officer at fund of funds Eddington Capital Management.
"The evaluation of that liquidity risk is as much a qualitative assessment as it is a quantitative one and you don't need additional risk managers to oversee that process. You just need to have a thorough understanding of the market environment you are operating in."