It has been an extremely difficult environment for the hedge fund world. Alpha has become increasingly elusive, and most funds are not only under-performing, they are flat to negative recently.
Those people who can consistently generate alpha are highly sought after. This has resulted in a full blown “war for talent”
So says Ilana Weinstein, founder and CEO of The IDW Group, a leading consulting & hiring boutique for hedge funds, private equity and family offices in search of top investment talent. IDW works with firms such as Citadel, Millenium, Point 72, and other highly-rated, sophisticated shops.
Weinstein launched IDW in 2003, when there were 3,000 hedge funds managing $500 billion; today, there are over 11,000 hedge funds managing $3.5 trillion. However, about two thirds of these funds have assets of $250 million or less.
Weinstein also calls it a myth that “the quickest way to achieve wealth is to launch a hedge fund.” She suggests the shakeout in hedge funds will continue: “Its like a cottage industry of two bit players;” most of whom will either just get by or not exist in a few years.
In our Masters in Business conversation, she explains why “Scale” is so important in the hedge fund world — data sciences and quant are the path to alpha, and not many few firms can afford access to that sort of talent.
Her favorite books can be seen here; A transcript of our conversation is available here.
You can stream/download the full conversation, including the podcast extras on Apple iTunes, Overcast, Spotify, Google, Bloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.
Next week, we speak with Joe Ricketts, founder of TD Ameritrade, whose family trust owns the Chicago Cubs. He is the author of The Harder You Work, the Luckier You Get: An Entrepreneur’s Memoir
