Hedge Fund Hiring

As the Financial Timesreported Thursday: “Citigroup estimates that hedge funds have now placed $600bn in cash, and that $100bn of this is held in money market funds.” The BSDs are investing like grannies who survived the Great Depression [Ed. note: I count myself among those grannies]. Riding out the storm by parking assets in cash is a smart strategy for a hedge fund that has already scored big gains for the year. But most hedge funds haven’t. Earlier this week, it was reported that, globally speaking, only one in 10 hedge funds is earning performance fees—i.e., the 20 percent of the fund’s gains that the managers keep as compensation.

Hedge funds, who have kept the finance industry afloat by hiring so aggressively, are going to slow down their frenzy and perhaps let some people go. How can they maintain hiring amid a fee squeeze? No fees = no bonus pool.

The End of the ‘BSD’, Wall Street: Goodbye to conspicuous consumption – Newsweek