Multistrategy hedge funds: Who are they? How do you get a job there?
The hedge fund industry has undergone a metamorphosis in the past five years as multi-strategy funds have come to dominate a landscape once occupied by lone mavericks. As multi-strats have added assets under management, they've also added headcount. Excluding clerical staff, a handful of top funds now employ over 12,000 people.
As the chart below shows, Millennium Management is by far the biggest of the multi-strategy firms when it comes to employees. Regulatory filings from last week show that Millennium employs 4,810 staff in total (excluding clerical staff), of whom 2,400 people are investment advisory staff and researchers. This compares to just 2,823 at Citadel or a mere 615 at Exoduspoint.
The small number of investment advisory staff at top multi-strategy funds reflects the difficulty of leaving an investment bank for a major fund. - Although it's not uncommon for top traders in banks to make the move, it's not easy either. Funds will only hire a small percentage of the people they meet, says Dan James, managing partner at hedge fund recruitment firm Monroe Partners. "- It’s a very competitive space and not everyone’s strategy will fit into a multi-strategy environment.”
The latest regulatory filings also reflect funds' hiring priorities, plus the potential dangers of joining small 'pods' which may or may not survive strict loss-limiting measures. As the chart below shows, Citadel cut 132 investment employees last year, even while it added 193 employees in total (excluding admin staff). People in the latter category are likely to include technology and infrastructure staff. Investment staff were cut even though Citadel made $16bn in profit in 2022; 2023 is unlikely to be so kind.
The charts below, also taken from the regulatory filings, illustrate the key difference between Citadel and Millennium. Millennium has far more offices than Citadel (even though many of these offices are simply clusters of staff in outposts), but Citadel's offices tend to be larger and more densely populated.
Regulatory data only shows the headcount at the bigger offices run by each firm and doesn't show the number of people Citadel and Millennium have in their Miami and New York head offices, respectively. Notably, Citadel's London office is by far its biggest outside the US, and has been growing; Citadel's Paris office is tiny by comparison.
The funds' comparative filings for 2022 and 2023 also highlight the extent to which offices come and go. Six offices dropped off the list for Millennium last year, while another six joined. Citadel seemingly closed offices in Edinburgh, Stockholm and Minneapolis, but opened some new ones in Canada and moved to new premises in Park Avenue New York City.
With most hedge funds having a worst year in 2023 than in 2022, it's possible that headcount at multistrategy funds will fall this year. However, headhunter Russell Clark at Figtree Partners says many will simply switch recruitment to more successful strategies. James says there's a tendency for all funds to hire into existing teams rather than adding new ones: "A lot of the big funds are interested in adding junior talent in the form of sub-pms who join existing pods.”
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