The $6.4 billion Balyasny Asset Management began its Anthem program in 2016 to train senior analysts to become portfolio managers. Participants run half the capital of the firm’s average team. Seven of the firm’s 46 portfolio managers went through the training and are regularly among the top money-makers, according to people familiar with the matter. It has 18 more analysts in the pipeline.
Millennium favors seasoned professionals and promises them greater autonomy in running their teams, which can be as small as two people. Last year investment team hiring increased by 38%, and the firm has been looking beyond its traditional strategies of fixed-income and long-short equity as well as adding teams in Europe and Asia, said people briefed on the matter.
In the past few years, some payouts have reached 25%, though such arrangements typically include hurdles surrounding performance and volatility and cover managers who run teams with sub-portfolio managers, the people said. Its non-competes, which had been at around three months, have gotten longer as the industry average approaches nine months.
Citadel’s payouts are lower -- in the mid-teens -- but the portfolios are bigger, usually $2 billion to $3 billion. The teams generally include a portfolio manager plus four to seven analysts, some of whom run sub-portfolios. Non-competes average a year, and managers may have to sit out as much as 18 months to get their deferred compensation.
The traders attracting the biggest pay packages are generally the most senior lieutenants from traditional hedge funds, rather than stars from other multimanager firms. The initial payments, which can reach $20 million or more, include signing bonuses, a two-year guarantee and the deferred compensation that a candidate would have to forgo to jump ship, recruiters said.
Spokespersons for the hedge funds declined to comment.
Some investors say the costly competition for talent is one reason they shy away from these multimanager firms that pass through expenses to their clients.
“We don’t invest in any of these multistrategy, multimanager firms, in part because it seems like a zero-sum game where each firm is competing with other firms for a limited set of talent, and all-in expenses tend to be very high,” said Adam Blitz, chief investment officer at the $3.2 billion Evanston Capital Management.
This article was provided by Bloomberg News.