Room for optimism for those with experience on their CVs
Candidates with fixed income and emerging market debt expertise are best placed to negotiate increasingly favourable terms with prospective employers
GROWTH in the Bric countries, Asian and Middle Eastern markets took centre stage in 2011, meaning the biggest challenge for funds was recruiting individuals with a track record in exploiting this space. Candidates with the proven skills to raise assets and a mobile rolodex in these jurisdictions were in high demand.
This demand didn’t go unnoticed by the candidates, who became increasingly aware of being a valued commodity. This proved to be the one space in which the candidate, not the client, held all the cards throughout the interview process.
In 2011, two stories were being sold to these candidates. The large institutional clients talked of the “institutionalisation of new money” and sold themselves on their brand, franchise and track record as a key requirement for potential investors, claiming investors were cautious allocating assets into funds without a track record. The counter-punch from start-ups and smaller funds that decided to go external was to sign off very competitive budgets in order get their chosen candidate on board. In the past, competitive commission on an “eat what you kill” basis was the main selling point, but equity and profit share is increasingly becoming much more popular. There was by no means an exodus of candidates moving from the institutional side to the smaller funds in 2011, but the idea of teaming up with David, rather than Goliath, looked a lot warmer than it did in the height of the credit crisis.
The buy side also showed an appetite for start-up hedge fund ventures in 2011. Those portfolio managers with a track record and the courage to match took the plunge, and we witnessed more success stories than failures throughout last year. We anticipate that this trend is likely to continue in 2012. Similarly, there is plenty of new cash readily available in the marketplace, and this coupled with continuous pressure on compensation rewards at the bigger banks and asset managers has encouraged those high performing managers to take charge of their own destiny in order to gain more significant returns. Despite the constant references made to a downturn in the global economy and impending disaster in Eurozone, these trends are proof of the existence of pockets of optimism.
That said, 2011 was also a year of reshaping for some institutional asset managers. Managers took a step back and rebalanced their emphasis on the “home bias” of their product suites and the personnel they allot to them to their global and emerging market products. This reshaping contributed to an increase in internal mobility throughout the year, where certain high performers made a fresh start in new product lines and markets.
From our perspective, fixed income and emerging market debt continue to show signs of continuing as the front runners of all asset classes from an allocation and talent perspective. Many managers that missed the boat in this area are endeavouring to recruit external senior talent to make up for lost time.
Shane Ferguson is a partner at The Black Swan Group.