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Chief Investment Officer: “Hedge Funds Scorned by MBAs”

http://www.ai-cio.com/channel/Manager-Selection/Hedge-Funds-Scorned-by-MBAs/

by Amy Whyte

An increasing number of business school students are aspiring to private equity jobs, while few seek out roles at hedge funds.

It’s not just investors who are pulling away from hedge funds—business school graduates are opting out of the industry as well.

Roughly 5% of current MBA students surveyed by Training the Street named hedge funds as their top choice of employer, even fewer than last year.

Instead, business students are increasingly pursuing roles at private equity firms, which ranked as the third most preferred type of employer. Of respondents, 13.7% named private equity as their first career pick, up from 10.8% last year.

Large investment banks, boutique advisory firms, and private wealth management companies also saw an increase in interest from MBA students, with “bulge bracket” banks like JP Morgan and Goldman Sachs ranking as the top choice overall.

However, Training the Street CEO Scott Rostan said the results of the survey don’t necessarily mean hedge fund suffer a talent deficit, as business students often opt out of pursuing “highly coveted” roles in favor of the “most available and financially secure job options.”

“Positions at hedge funds… are only available to a select few MBAs,” Rostan said. “Job seekers understand this reality and are focusing their job search on more readily available positions in banks and consulting firms.”

The recruitment practices of financial firms reflect this: Just 4.9% of students said they were actively recruited by hedge funds this year, down from 8.3% last year. Yet nearly half of respondents were recruited by big banks, and almost a third by investment boutiques—both representing increases from last year’s results.

Private equity recruits decreased as well, from 11.7% in 2015 to 9.4% this year. But unlike with hedge funds, private equity’s lessened effort did not dampen the interest of prospective employees.