At Michael Platt’s BlueCrest, payouts are deferred by two years and quitters who break their contracts lose those awards. The firm pays as much as 30% of the trading profits, one of the highest rates in the industry, a headhunter said, describing it as a golden chain.
Billionaire Ken Griffin’s Citadel also has a multi-year deferral program, which allows staff to invest in Citadel funds. With its flagship hedge fund gaining 38% last year, that’s another carrot to keep existing employees and lure recruits to a firm that moved from Chicago to Miami in 2022 and yet retains a large presence here.
Representatives for BlueCrest, ExodusPoint and Verition all declined to comment.
When all efforts to hire the best of the best fail, large hedge funds end up tapping top traders at smaller firms to manage hundreds of millions of dollars externally.
Millennium, where more than 290 teams of traders invest across asset classes, remains one of the most prolific employers in the industry. Still, it gave several billion dollars to Delta Global Management and Lorenzo Rossi’s Kedalion Capital Management to manage. Such external arrangements make up less than a tenth of Millennium’s teams of traders, and many of the outside groups manage money exclusively for the firm, according to a person with knowledge of the matter.
Point72, BlueCrest, Balyasny and Schonfeld are among those that have given money to external teams through so-called managed accounts that still give them control. Just over half of all the multi-manager hedge funds now allocate to outside traders, according to Goldman Sachs Group Inc.
“Even the biggest hedge funds have become meaningfully more flexible to win the bidding war for talent because there’s so much more capital in the space and so many more firms trying to emulate successful players,” said Marlin Naidoo, global head of capital introduction and consulting at BNP Paribas.
But poaching traders is still the most common approach, with one top industry executive describing multi-manager firms as the “apex predator.” Those firms manage just 8% of the industry assets, they employ 24% of total staff, according to estimates by Goldman Sachs.
“The market is absolutely competitive, but we’re in it to compete for the best talent,” said Danielle Pizzo, Schonfeld’s chief strategy officer. “We’re flexible, we customize our offering in ways that others don’t,” she said, adding that the approach has ensured that only three portfolio managers left voluntarily over the last decade.
There’s even been hiring to enable more hiring.
When Schonfeld launched its discretionary macro and fixed-income business in 2021, the firm brought on individuals within the unit reporting to co-heads Colin Lancaster and Mitesh Parikh to exclusively focus on acquiring talent. Peter Hornick, previously at ExodusPoint, leads such a team at Brevan Howard Asset Management. Eisler recently hired former Goldman partner Alain Marcus to concentrate just on recruiting.
Still, for investors who pay for it all, the only reliable way to earn stellar returns is to keep giving money to platforms who can prevail in the race.
“Multi-PM platforms are first and foremost an HR business,” Blue Lotus’s Sirois said. “We worry about some of our multi-PMs who are not keeping up with the bidding war or provide sub-par environment for the traders.”