Of all the problems hedge funds face today — increased government scrutiny, declining returns for some — this is perhaps the strangest problem to have: running short of talent.
Chalk it up to their success. According to Financial News Online, so much capital has flown in that managers cannot find enough savvy employees to maintain that momentum. Hedge funds collected $111 billion in the first nine months of 2006, swelling hedge fund assets under management to $1.3 trillion and helping pump up salaries and bonuses more than 20 percent to an average of $1.5 million before profit sharing. While one would think that enviable, that rise in investors’ money has created a “structural problem” for the industry.
Individual managers, attracted to the billions being poured into hedge funds, are striking out on their own, leaving the established firms that are favored by most institutional investors without enough help.