So, it turns out that the people who want to work for hedge funds don’t mind about allegations of high staff turnover. They don’t mind being continuously rated on their performance via an iPad app. Nor do they mind about the wild eccentricity of their colleagues. They just want to work for big name funds – especially if they have a quantitative bias.
Four out of the ten most popular hedge funds that people want to work for now are quant funds according to respondents to our latest Ideal Employer survey. They are: Two Sigma Investments, AQR Capital Management, Renaissance Technologies and DE Shaw.
The two most popular hedge fund employers in 2017, however are Ken Griffin’s Citadel and Ray Dalio’s Bridgewater Associates. Neither are quant funds per se, but both have a quantitative bent.
Citadel is a multi-strategy fund that invests across fixed income, macro, equities, commmodities, credit and quantitative strategies. With $26bn in assets under management, Griffin’s behemoth offers something for everyone, but it’s Citadel’s quant fund that has raised attention recently. In March, Citadel rehired James Yeh to head its quant unit and reportedly began running a series of “datathon” competitions at 18 universities globally.
Bridgewater’s $160bn in assets under management are invested in a way that most closely resembles a global macro strategy. However, Bridgewater places a huge emphasis on the use of technology and is described as a global macro fund using “quantitative methodologies” by a former employee.
In fifth position, Man Group incorporates the quant fund Man AHL. Further down our list, Brevan Howard is best known for its global macro funds. Bluecrest runs funds across fixed income, credit and emerging markets, and Point72 is fundamentally a long short equities business. Point72 began building a big data investing team back in 2015, however, and now runs a fund titled “Cubist Systematic Strategies” whilst teaching all its junior employees how to code.
Quant funds’ popularity as employers is unlikely to be a coincidence. Point72 and Bluecrest are both closed to outside money, but as a sector, hedge funds using quantitative methodologies were the only ones raising net new capital last year according to Bloomberg. By comparison, event driven funds which trade around particular occurrences like an M&A deal, and long short equity funds which trade the equity markets, both saw large net investor withdrawals. – Aspiring employees can clearly see where the future lies.
On the other hand, people who want to work in hedge funds don’t seem distracted by suggestions of high employee turnover – an accusation that has been levelled at both Citadel and Bridgewater Associates (25% of employees don’t last 18 months at Bridgewater). Nor do they seem to mind Bridgewater’s singular culture, which is based around founder Ray Dalio’s emphatic belief in “radical transparency” and involves employees continuously rating each other’s values ability and skills on an iPad app. Nor too do they care about the eccentricity of the brilliant minds at Renaissance Capital, where some senior staff reportedly rarely speak.
Instead, our research into the hedge funds people want to work for suggests the big draw – as with banks – is both big money and interesting work. All else is secondary, including flexibility and culture. Perversely, the fund perceived as offering the most in the way of peripheral pleasures – AQR – was also perceived as paying the least and having the least interesting work. And although Bridgewater scored a lot higher than Citadel for its ‘positive vibe’, Dalio might be surprised to find out that radical transparency isn’t the main reason people want to work there.