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Hedge funds fight for Asia talent with training, bonuses
IN A glass-walled room at Point72 Asset Management LP's outpost in Hong Kong, five fresh-faced graduates pore over spreadsheets and give tentative answers to questions about cash flow and the cost of capital.
These would-be masters of the universe are the first participants in Point72's Asia Academy associate programme, the hedge fund firm's latest salvo in an intensifying war for regional talent.
As more and more big hedge funds expand in Asia and the region's assets under management grow at a faster clip than in the US and Britain, industry executives say the number of qualified candidates has failed to keep up.
Hedge funds have responded by poaching from rivals, sweetening compensation packages for star performers and committing more resources to younger employees. Firms like Steve Cohen's Point72 and Balyasny Asset Management are investing in extensive training programmes, betting some of their new hires will develop into alpha-producing portfolio managers who stay loyal.
"There aren't as many ready-made, experienced portfolio managers in the Asia-Pacific region" who gel with Point72's investment style, said Howard Man, who oversees the Stamford, Connecticut-based firm's equity-focused investment teams in Asia. Point72's 10-month training programme for the region, modelled after one that the firm introduced to the US in 2015, had its first Hong Kong class in March. The firm has yet to roll out a dedicated programme for Europe.
While the global hedge fund industry has faced a rocky few years as investors rebelled against high fees and lacklustre returns, Asia has proven a relative bright spot thanks to stronger economic growth and expanding capital markets. Combined assets under management at funds based in Australia, Hong Kong, Japan and Singapore have climbed more than 20 per cent since 2016 to US$192 billion, according to research firm Eurekahedge Pte. That compares with a 5 per cent increase in the US and a 6 per cent drop in the UK
Hedge fund "platforms" like Point72 - which allocate money to multiple internal portfolio managers each responsible for his or her own slice of the firm's overall assets - have been a notable source of growth in Asia.
New entrants in recent years include ExodusPoint Capital Management LP, Schonfeld Strategic Advisors LLC and Polymer Capital Management, which was founded by former Point72 Asia chief Angus Wai. The region now has at least eight major hedge fund platforms - twice as many as in 2013 - that oversee a combined US$100 billion globally. Polymer is among those that have poached from rivals in Asia, hiring portfolio managers from both Point72 and Izzy Englander's Millennium Management LLC.
Growing demand for talent at platforms has coincided with a drop in supply from proprietary trading desks at banks, a long-time training ground for hedge funds that has been whittled down by post-2008 regulations. The resulting shortage of available managers often surprises international firms when they look to expand in Asia, said Nilay Khandelwal, managing director of Michael Page Singapore, a recruiting firm.
"The challenge isn't finding a portfolio manager, it's finding a portfolio manager with the experience first hand of investing in Asia while being based in Asia," Mr Khandelwal said. "Anyone who's been here for the last five, six, seven years is in a good role, and to move them is tough."
Compensation packages in Asia are increasing as hedge funds pay up to attract top candidates. Top portfolio managers in Asia can take home US$15 million to US$20 million a year once performance bonuses are included, while junior portfolio managers can command US$2 million to US$3 million, people familiar with the matter said. BLOOMBERG