Following a volatile year, many global hedge funds are gearing up for 2023 with increased inflation rates in mind. With returns at their lowest since the global crisis of 2008 and the lowest number of hedge funds launched in the last ten years, it is critical to identify and limit risks for a more buoyant 2023. As a result, these hedge funds are diversifying their portfolios to account for commodities and bonds that will thrive in conditions of high inflation.

However, it is important to note that Q4 proved successful for larger hedge funds, with Citco recording a weighted-average return of 4.11%, compared to the 2.44% typical median return.

Opportunities in Volatile Conditions

Multi-strategy, equities funds, and fixed-income arbitrage were identified as the strongest performers in Q4. For hedge funds looking to expand their portfolio offering for safeguarded returns, attracting experienced talent in these areas should lead to a more buoyant year. Many hedge funds thrived under turbulent market conditions, and this period of high volatility creates the opportunity to generate more alpha, as has been proven successful in 2022. Managed Futures and Global Hedge Funds, which generated 10.2% and 10% respectively, had the highest alpha, followed by credit at 2.2%.

Salary Benchmarketing

The salary benchmark for portfolio managers continues to maintain the standard of approximately £130k – £150k basic compensation, based on seniority, with bonuses dependent on performance.

In the quant space, while it does largely depend on overall company performance, quant developer salaries typically range between £80k – £90k, with a 30-50% bonus, while quant researcher salaries, the typical range is £120k – £150k, with a 50-100% bonus.

To discuss the topics covered in this update, your recruitment processes or new opportunities, please get in touch with Orla Louden, Senior Consultant for Hedge Funds.