A: Hedge fund performance this year has not been strong – industry performance is still down almost 5% for the year (4.37 through November, according to HFRI Index). Additionally, a huge number of funds – 81.3% at the end of November, according to Hedge Fund Review – are still under a high water mark. While this environment is not terrific, it is nowhere near as bad as what we saw in 2008, and the implications for hiring should be muted. We expect a more abbreviated cycle than in 2008, from initial slow hiring activity, to fence sitting, to active hiring – assuming, of course, performance improves.
And for additional perspective, we can quickly review what happened with hiring the last time firm performance for the majority of firms was not good, and as a matter of fact much worse performance than this year. Exactly two years ago, an industry hiring trend piece showed little/no hiring in the first quarter of 2009, except for the funds with relatively good performance (single-digit positive). Then, a few months later, hiring activity picked up, though many firms were still ‘waiting for the dust to settle’ and ‘fence sitting.’ As fund performance and the general hiring market improved, employers that had held onto the view that the talent pool will only get richer over time were proven wrong. They then became more active in hiring and taking advantage of available talent.