Asia to Create Thousands of Hedge Fund Jobs, Pinnacle Says

Date: Thursday, June 26, 2008
Author: Bernard Lo and Bei Hu, Bloomberg.com

(Bloomberg) -- Asia's expanding hedge fund industry will probably create tens of thousands of jobs in the next five years, even as investment bank recruitment dries up after the U.S. subprime mortgage market collapse, said Sheridan Mather, a managing director of recruitment firm Pinnacle International Ltd.

``We're seeing some streamlining at the moment. We're seeing some of the not so well-performing funds closing down,'' London- based Mather said in an interview with Bloomberg TV today. ``But we're seeing massive growth of the established guys.''

The world's biggest banks and securities firms cut 83,000 jobs in the 10 months to May as U.S. subprime mortgage delinquencies seized up the global credit market, according to data compiled by Bloomberg. Citadel Investment Group LLC and CQS (U.K.) LLP are among hedge fund managers that have used the opportunity to hire staff from investment banks to accelerate Asian expansion.

Asian hedge funds posted an average 5.2 percent loss this year, the worst first five months of the year since Singapore's Eurekahedge began to track the data in 2000. Global hedge funds setting up in Asia are driving the workload of recruiters more than local players, Mather said.

``This is still very much an active market and much more bullish than we're seeing in Europe and the U.S.,'' Mather said. Market volatility and the collapse of hedge funds have heightened awareness of risk, raising demand for people such as lawyers and compliance officers.

``In the last three years, a lot of the focus has been on getting good analysts, getting good portfolio managers, getting good traders,'' Mather said. ``Investors now need the reassurance their money is safe with their chosen funds.''

CQS Hires

CQS, a London-based manager that oversees $9.6 billion of assets, increased its staff in Asia by more than 40 percent to almost 20 in the past six months, Brian Pohli, a director heading up the Hong Kong office, said June 17. In May, CQS announced the recruitment of Michael Schulz from Lehman Brothers Holdings Inc. as its risk manager in Asia.

Mather said separately that he estimated investment banks in the first quarter filled 80 percent fewer positions in prime brokerage in Asia than a year earlier, as headcounts worldwide are frozen because of subprime and credit market losses.

This contrasts with the past two or three years when prime brokers were being poached just before the bonus season with compensation guarantees to meet demand in a region where hedge fund assets expanded 32 percent last year alone, according to London-based AsiaHedge.

The world's largest banks and securities firms have reported almost $400 billion of writedowns and credit losses since the beginning of 2007, according to Bloomberg data. Prime brokers provide services such as financing, stock lending and custody to hedge funds.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net.