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Sep 10, 2020

Hedge funds boost hiring amid Covid-19 pandemic, finds survey

Larger North American funds the most active

Hedge funds are on a hiring spree as they look to take advantage of market volatility caused by the Covid-19 pandemic, according to new research.

More than half (57 percent) of hedge fund managers say they have either hired or have tried to bring in new staff since March, finds a survey conducted jointly by the Alternative Investment Management Association and KPMG.

The most active recruiters are firms with more than $1 bn in assets based in North America, notes the research. Almost two thirds (64 percent) of managers from this group say they have hired additional staff. 

The survey, conducted during July, polled the views of 144 hedge fund managers with estimated assets of $840 bn.

The research includes comments taken from interviews with industry players. One quote, from a prominent hedge fund lawyer, says the industry is witnessing significant levels of job swapping: ‘Those hedge funds that are prospering in the current volatility and market dislocation are actively hiring, with some talent moving from firms that have endured a more challenging period.’ 

The high level of market volatility since the start of the pandemic has offered hedge funds the chance to prove their value after a disappointing 2019. The industry returned around 7 percent on average last year, according to data from Eurekahedge, which tracks hedge fund performance. That compares with a return of more than 30 percent for the S&P 500. 

While some hedge funds have posted large returns this year, the industry on the whole has struggled to outperform: in the first half of the year, Eurekahedge’s benchmark index dropped 1 percent, while the S&P 500 fell 5 percent.

Although hedge funds have increased outsourcing of certain functions during the pandemic, managers have been keen to keep investor relations work in house, notes the research. That’s because ‘many funds see IR as key to driving growth in a decentralized environment,’ write the report authors. 

At the same time, funds have made the most of technology to keep them in touch with investors and prospects. Around three in five respondents (58 percent) say they have optimized the digital tools being used by IR functions. 

‘Going virtual has leveled the playing field,’ comments one Australia-based fund manager in the report. ‘It was always difficult to persuade investors to travel to conferences or to meet in person. Now, investors seem much more open to meeting virtually.’ 

Hedge funds have also taken advantage of the virtual environment to expand the geographical focus of their equity investments, suggests data seen by IR Magazine.

IHS Markit analyzed its market data to find out which investment firms had undertaken the most international meetings with listed companies during May 2020. The findings show that hedge funds were among the most active in engaging with companies from overseas. 

‘It was surprising to me that in this environment, where [hedge funds] weren’t able to go to conferences and sit down with a significant number of issuers in group meetings, they were still able to interact virtually with a large number of clients,’ Christopher Stroh, situational analytics director at IHS Markit, told IR Magazine earlier this year.