25/05/18

HEDGE FUNDS: Which ones Everyone wants to work for, and why

(eFinancialCareers) -- People love quantitative hedge funds. In our Ideal Employer survey of the top hedge funds, quant funds - or funds with a quantitative approach occupy many of the positions in the top 10.

The funds in the two top slots are not pure quant funds, however. Ken Griffin's Citadel runs quant strategies and has been stocking up on quant hires and artificial intelligence expertise, but it uses fundamental research and "experienced judgement" alongside its quantitative analytics.  Ray Dalio's Bridgewater Associates is a global macro fund that underpins fundamental research with quant insights. Citadel and Bridgewater ranked first and second respectively both this year and last year.  The two clearly have enduring appeal for the top talent in the industry.

Citadel's selling point is pay. The fund received the highest percentage of votes in our survey (89% and 90% respectively) for its perceived high salaries and high bonuses. People want to work for Ken Griffin because - they think - he pays well.

They may not be too far wrong. Griffin himself earned an estimated $1.7bn last year and went out shopping for the most expensive home in Chicago with his spare cash. The average Citadel employee evidently earns considerably less than Ken, but pay per head at Citadel's London unit was $666k for 2016 (the last year for which pay is available), making it one of the most remunerative hedge funds in the UK. There are downsides to working for Citadel - top employees are famously tied in with two-year non-competes which keep them out of the market if they try to leave - but people are clearly prepared to overlook this with an eye to their bottom line.

At Bridgewater Associates meanwhile, boss Ray Dalio will be pleased to hear that Bridgewater out-ranks the rest as a desirable employer thanks to its perceived "strong executive leadership." Dalio and his managerial team were voted as strong leaders by 83% of our respondents who wanted to work there (compared to a vote of 63% for Griffin and his team at closest rival Citadel). Dalio is well known for his doctrine of "radical transparency" based on more than 200 rules or "Principles" derived from his life experiences. Employees at Bridgewater are expected to adhere to the doctrine, which means being "radically truthful" and operating on the basis of "total straightforwardness." They are also given an iPad app to rate each other's performance in meetings.  This can cause issues: co-chief investment officer Eileen Murray said this month that Bridgewater's culture is not for everyone and that the turnover rate at Bridgewater is twice as high as elsewhere. Even so, plenty of people clearly approve. It helps that Bridgewater ranks highly for its perceived pay, too.

Behind Bridgewater, quant fund Two Sigma is also perceived as generous to its employees. As we reported today, this is correct to the extent that Two Sigma paid its average London employee $400k for 2017 (albeit $200k less than Citadel paid a year earlier). Two Sigma is also ranked highly for "office environment" (its offices have recording studios and ping pong tables) and for comparatively manageable working hours.

Another pure quant fund, Renaissance Technologies, comes in behind Two Sigma. Known for making its heavy-smoking 79 year-old founder Jim Simons extravagantly rich (he's worth $18.5bn) RenTec has a reputation in the market as a nice place to work that hires highly eccentric and exceptionally brilliant people. "My management style has always been to find outstanding people and let them run with the ball,” Simons told the New Yorker last year.  "I was a good mathematician,” he added, “I wasn’t the greatest in the world, but I was pretty good.” The way Simons told it, he made RenTec seem fun: bonding exercises at the fund involved seeing who could ride a bike the slowest without falling off.

None of this has exactly fed through to Renaissance Technologies' current employer brand: people told us they want to work there because it pays well, because it's perceived to be an innovator in the industry, with great financial performance and challenging work. Simons isn't at RenTec anymore, but people might want to ask about the bike rides all the same.

In fifth place comes Point72 asset management, the former family office-turned hedge fund accepting outside money run by "legendary investor" and former domestic pig owner, Steve Cohen. Point72 is also ranked highly on pay (a member of the HR team was on target to earn over $500k in 2018), but it particularly out-performs rivals for its perceived "challenging and interesting work." The fund is known for using statistical analysis to support its fundamental research; this clearly appeals.