The situation at Goldman Sachs Group, Inc. (NYSE:GS) – one of the most respected firms on the Street – illustrates how the transition is playing out. This week, two prominent Goldman credit traders announced their plans to depart for MKP Capital Management and Anchorage Capital Group, respectively. They are, Bloomberg noted in reporting the news, not alone in departing Goldman for greener hedge-fund pastures: At least two other traders of credit products have left the firm for hedge funds since November.
And even some executives are exiting Goldman for other opportunities. Raj Sethi, an MD in the firm’s commodities-trading group, left just last week; he is likely to join a hedge fund, a source told Bloomberg.
It’s not just the Street’s revenue slump that’s driving the talent exodus, however. The gradual implementation of the Volcker Rule, which restricts banks’ positions in hedge funds while limiting their proprietary trading activity, is forcing many traders to update their resumes and make networking calls.
Clint Carlson's Carlson Capital Double Black Diamond fund returned 3.34% in August net of fees. Following this performance, the fund is up 8.82% year-to-date net, according to a copy of the firm's August investor update, which ValueWalk has been able to review. On a gross basis, the Double Black Diamond fund added 4.55% in August Read More
Yet it’s telling that so many high-level Wall Streeters are seeking out new opportunities in hedge funds. The trend reflects both funds’ torrid growth – global hedge-fund AUM recently passed the $2 trillion mark – and the prestige that a role at a well-managed fund can carry. Some finance pros are even launching their own funds; one, named Tybourne Capital Management, is reported to be one of Asia’s most hotly anticipated.
Still, a person need not have an Ivy League degree and a flawless resume to find work in the hedge fund industry. Bob Olman, an MD at executive-search firm Alpha Search Advisory Partners, believes the place to look for hedge fund jobs is in non-client-facing work.
The growth areas for hedge fund employment, he said in a recent report – obtained and summarized by Business Insider – will likely be investor relations and operational risk management, since funds need to both retain their current investors and limit their operations-linked losses.
Different funds will have different needs, of course. But as 2012 progresses, look for talent to continue trickling out of Wall Street firms and into the hedge fund industry.