Hiring Trends: Equities

Hiring in Equities Investing has been 46% lower in the first five months of 2008 than over the same period in 2007.

Equity Hiring figures for May fell off a cliff, standing at only 17% of May 2007’s figures – the lowest level of hiring for any single month over the last four years.

Up until the end of March 2008, hiring levels had been slightly down on the previous year – a 28% reduction on the first three months of 2007 - though, at that time, Equities remained the least effected of the areas we monitor. From April onwards, Equity hiring rapidly decelerated, falling by 53% in that month; and May’s very low figures have further accelerated the trend, with a fall of 83% over May 2007. In other words, within two months, Equity hiring for the year to date has declined by another 30% on last year’s volumes, with overall hiring at just over half the level seen from January to May 2007.

So what is going on? Our feeling is that market sentiment took a marked turn for the worse during March in response to the events such as the collapse of Bear Sterns, etc. At which point, many firms suddenly brought in hiring freezes, with the consequence that Searches in progress at that time either got binned or put on hold. Offers that would usually have gone out by the end of March simply didn’t materialise. Hiring figures for offers made/accepted in March start showing up in job moves one, two and three months later, as candidates serve out notice periods, and assume their new positions in April, May and June. So the sudden dramatic fall in hiring in April and May is simply reflecting the brakes applied back in March. For this reason, we expect that June hiring figures will also be significantly down on last year, as the effect of March’s loss of nerve continues to work its way through the system.

Although there are some signs that sentiment has improved the sudden downturn in the first hiring cycle will probably mean that hiring levels will be flat for the remainder of the year. This is because the year has, broadly speaking, three key hiring cycles. The first runs from January to March. The second runs from March to July, and the third from September to November. The second cycle is often fuelled by the need to fill gaps arising from the first cycle. Since the first cycle has been very subdued this year, there are very few gaps to fill, which will consequently depress the second cycle. And the third cycle is anyway always relatively low in volume given that most firms prefer not to have to buy out full-year bonus packages by making offers in December, preferring to wait for a couple of months until bonuses have been paid, letting them pick up candidates more cheaply in the New Year (and back to the first cycle, etc). This is a trend showing across the board on the buy side. Not surprisingly, given the unravelling sub-prime crisis and liquidity pressures in the first quarter of 2008, the impact on Fixed Income hiring has been the most extreme – down 53% on last year, with hiring in Institutional Sales & Client Servicing – so far the least effected – down by a relatively buoyant 24%.

Hiring demand this year has been broadly spread across the main geographic foci, with greater demand for Global Equities investors, each comprising 30% of all hires in the year to date; though European Equity investors and Emerging Markets Investors have also been in demand, comprising 25% and 10% of all hires, respectively. Hiring for UK investors remains relatively flat at 35% of all hires. Most hires (61%) have been Fund Managers, with Analysts accounting for another 17% and Product Managers only 5%.

Our prognosis is that hiring in Equities is likely to flatten further as the market swings back in favour of Fixed Income and equity teams continue to suffer from funds redemptions promted by performance issues in recent volatile markets. We don’t expect hiring is this area to pick up substantially until 2009.

Key hiring Houses in the year to date have included:

• Scottish Widows’ Investment Partnership, which has also hired three Equity Managers: Christos Koutsoyannis has joined as a European Equity Fund Manager as part of its efforts to fill the gap left by Nigel Bolton’s move to BlackRock along with his team. Christos was formerly in a similar role at Alliance Trust. Stephen Hall has also joined as Investment Director of Global Developed Markets, with responsibility for researching the Japanese Utilities, Financials and Consumer Discretionary Sectors as part of the group’s collaborative approach to managing its global funds. He was formerly one of a team of four managers on the Japan fund at Resolution. And Mike McNaught-Davis has also joined the Global Equities team, with a background in Japanese Equity Investing, and was formerly at Baillie Gifford.

• Altima Partners, Insight Investment, Fidelity Investments, Threadneedle Investments and UBS Global Asset Management have also each hired two Equities investors since the start of the year .

There have been relatively few senior hires this year in Equities – none, in fact, since March.

In March:

• Ilario di Bon has joined Fidelity Investments as Head of Global Equities. He will report to Chief Investment Officer Nicky Richards and will have no direct portfolio management duties. He was formerly a Senior Portfolio Manager on the Global ex-US Equity team at UBS and oversaw the group's global thirds strategy, which benchmarks funds equally against Europe, Asia and the US.

• William Weng joins UBS Global Asset Management’s structured equities team as the Head of Active Quantitative equities, responsible for building the active quantitative equities offering by launching active long only, 130/30 and market neutral quantitative equity strategies. He joins from Credit Suisse Asset Management.

In February:

• Davina Curling has joined Russell Investment Group as Managing Director. She will be responsible for managing over $17.4bn of assets. She was formerly Head of European High Alpha Products at F&C Asset Management.

• Hiring Trends: Equities
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