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Top hedge funds pay well, but jobs there can be short lived. Do you really want to join Brevan Howard or BlueCrest when you might be out within a year?

Brevan Howard and BlueCrest - hedge funds and staff 'churn'

Hedge funds stand accused of 'churning' staff. Is this fair?

So you think you're going to get rich working for a hedge fund? You can allegedly earn plenty of money as a portfolio manager or investment professional. But will it last?

Not necessarily. Hedge funds are notorious for ditching staff who don't make the grade. Just because you land a job with a top hedge fund, doesn't mean you'll keep one.

[efc_twitter text="“If we decide we don’t like a trader’s risk, then departures can be slightly abrupt,” "] admitted BlueCrest's chief financial officer David Dodd in an interview with Bloomberg this week. This follows the recent ejection of four out of BlueCrest's 18 U.S-based stock traders only 18 months after the fund expanded into the equities business.

BlueCrest isn't the only hedge fund leaking staff who were only recently hired. This week, Dhruv Piplani, the ex-Goldman Sachs trading wunderkind who made MD aged just 29, exited Brevan Howard after just one year. Piplani was recruited by Brevan in October 2013 as part of its push into equities. His departure was reportedly voluntary, but like BlueCrest Brevan Howard has a reputation for dispensing with staff who don't work out. The fund is "constantly churning people", complains a purported ex-Brevan employee in a recent posting on Glassdoor. "The turnover in staff is enough to make most people dizzy," he adds, saying that Brevan lets go of staff whose returns are flat - not just those who are actually losing money.

Brevan Howard didn't return a request to comment for this article and BlueCrest declined to comment. Both funds have a dubious history when it comes to equities hires. BlueCrest closed down a previous unsuccessful equities fund in 2007, making six people redundant in the process. Brevan Howard closed down a previous equities fund back in May 2011. As of last year, they've both been hiring equities professionals all over again.

"Most of the work we're doing at the moment is on the equities side," says one senior hedge fund headhunter in London, speaking on condition of anonymity. "A lot of fixed income and macro funds have struggled in the past two years, so it makes sense - they're diversifying into equities."

Headhunters and market sources say it's wrong to read too much into recent departures from the equities teams at the two major funds. A source close to BlueCrest said the recent U.S. departures were simply to make way for more hires next year. "These were people whose strategies didn't work out - it's a good thing their positions were liquidated as they had the potential to lose a lot of money." BlueCrest just hired Jonathan Bensimon from SocGen to start an equity derivatives and index group. Similarly, Brevan Howard hired Johan Tellvik from Moon Capital Management to join Piplani's equities team just one month before Piplani resigned.

The hedge fund headhunter says funds like Brevan Howard and to a lesser extent BlueCrest get a "bad rap" for hiring staff and firing them if they don't work out. "It's really not as bad as people say. The way that all these funds work is that they have strict risk limits which they impose on their portfolio managers. If you breach those risk limits you're out - it's just a simple rule."

AUTHORSarah Butcher Global Editor
  • tw
    8 November 2014

    breaching a risk limit is totally different to not performing based on returns- the comment doesnt make sense

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