Hedge funds built to last:
Achieving long-term competitive advantage through active
The hedge fund industry has experienced exponential growth in recent years, with more than 8,000
funds managing more than a trillion dollars in assets. This phenomenal growth has made the
sector a draw for high-profile traders and portfolio managers and, increasingly, for top talent in
functions such as sales and marketing, investor relations, legal, operations and technology, finance,
risk management and human resources. Despite the recent credit crisis, hedge funds are expected
to continue to attract investments from institutions and individuals looking for alternative invest-
ment strategies. Hedge funds will need to attract talented leaders from traditional asset managers,
investment banks and other financial services firms as management complexity grows and expecta-
tions from investors, particularly institutional investors, expand.
Spencer Stuart has been serving hedge funds and alternative investment firms for more than a
decade in a wide range of executive searches and talent studies. To deepen our knowledge of the
talent trends facing the sector, we interviewed hedge fund leaders across a range of functions
(e.g., founding partners, talent management/human resources executives, marketing and investor
relations professionals, and operations, compliance and risk management executives) to get their
observations about best practices in talent management for hedge funds. Through the course of
these discussions, we also uncovered a series of tips for professionals considering making the leap
from a more traditional corporate environment to a hedge fund. Among our conclusions include:
> As the industry grows and investor expectations increase, competition for top talent across all
functions will intensify.
> A shortage of key executive talent may emerge as a more significant impediment to growth than
access to capital.
> Hedge funds that actively manage their funds’ talent needs will be best