Jensen Partners Q3 2020 Newsletter: Reflecting on a New Hiring Landscape
Despite everything that has happened in 2020--a pandemic, mass protests and a contentious U.S. Presidential Election--fundraising in the alternative investment industry has remained at near peak levels, supported by a growing crop of sophisticated marketing professionals.
In just the last two weeks, my team and I have worked on more recruiting assignments and pitches than in any other two-week period since 2018. We continue to see strong hiring activity across strategies and geographies, with demand gradually ramping up following a brief pause during the early days of COVID-19. And with several promising vaccine candidates seemingly around the corner, this activity is poised to go into overdrive as we head into the tail end of the year. Indeed, many of the alternative investment professionals we've spoken to have hinted at plans to expand or jumpstart their marketing efforts in the coming weeks and months.
However, not all alts firms are in an advantageous position. While some firms have prospered, others have had to close up shop. The divide between the largest firms and the smallest ones has only accelerated, with many of the largest firms growing in size either through inflows or through M&A, while the smallest firms have struggled to attract the attention of investors who are understandably concerned about taking a chance on a small or emerging manager.
At the same time, the marketing landscape has changed in several important ways since the last time most marketing professionals were able to meet with investors face-to-face. The shift to a virtual fundraising environment has created challenges, but also opportunities. The same could be said for the increased focus on diversity and ESG.
In talking to clients and contacts across the industry, here are three things that we think alts firms should focus on to differentiate themselves in this new marketing environment.
- Diversity, Equity, and Inclusion (DEI) is no longer a nice-to-have, but a must-have. Firms around the world are waking up to the reality that DEI is now an imperative, especially for those firms hoping to raise or retain institutional capital. There is a growing recognition that DEI considerations must be incorporated across the organization, including all recruiting, hiring, training and promoting practices. Leadership from the top is also important to signal that diversity efforts are more than just a form of diversity-washing. (Read more about this topic in our recent diversity newsletter)
- ESG is no longer a differentiator; impact and sustainability represent the next frontier. Alternative investment firms have increasingly embraced ESG as a way to better evaluate portfolio risk and performance. According to a recent US SIF report, alternative investment firms increased their ESG AUM by 22% to $715 billion over the last two years, and the number of ESG-focused funds increased 16% to 905. Overall, ESG-oriented assets now represent one third of all U.S. professional assets under management. For alts firms, this means ESG represents a base-level of practice rather than a competitive differentiator. Alts firms that want to stand out in 2021 and beyond will need to turn their attention to impact investing and sustainable investing, which requires more intentionality in properly measuring and managing for both positive and negative impacts. Many private equity firms and even a handful of hedge funds and private credit firms launched impact funds in 2020, a trend we expect to continue for the foreseeable future. (Read more about this topic in our recent ESG newsletter)
- Product specialists are rewriting the rules of marketing. As the alternative investment industry has matured, we've seen more firms expand into new strategies and new geographies. The increasing complexity of many alts strategies has given rise to the product specialist--professionals who can straddle both the marketing teams and the portfolio management teams thanks to their ability to explain the technical nuances of a strategy to current and potential investors. The need for product specialists has only accelerated in the midst of the pandemic, with more investors than ever eager to understand the potential risks to their investments. These specialists have been able to effectively fill this void and carve out a niche as a key player of any marketing operation. (Read more about this topic in our recent newsletter on product specialists)
These trends offer some key takeaways for 2020 and a preview of what to expect in 2021. While there will always be twists and turns, the alternative investment space has remained remarkably consistent through what has been one of the most tumultous periods in modern memory.
Our data for Q3 shows hiring for marketing professionals remains near all-time highs, with 437 marketing moves in the quarter. This brings the year-to-date total to 1,347 moves, easily surpassing the 880 moves over the same period in 2019. This 53% YTD increase can largely be attributed to big hiring jumps in the quarter among Hedge Funds (86 moves), Private Equity firms (84 moves), Multi-Asset firms (62 moves) and Credit firms (56 moves). We expect to see an even greater surge in hiring in Q4 and into 2021 as COVID-19 vaccines get closer to the finish line.
As always, we will continue to monitor the data and engage with our contacts across the industry in an attempt to detect and predict potential shifts across the market. And we will keep our readers updated on the latest news and trends.
Finally, we would like to formally announce the relaunch of the Jensen Partners website. This project has been in the works for several months, and we are excited to be able to create a more interactive digital experience for our clients and partners. We invite you to poke around the new site, which includes: a library with all newsletters and articles published to date, a list of recent marketing moves, a list of current mandates, and more information about our new Diversity Tracking database. Please let us know what you like (or don't like) and how we can make your Jensen Partners experience a more fulfilling one
P.S: Thank you to everyone who voted for us as the best executive search and recruitment firm for the alternative investment industry! We are pleased to share that Jensen Partners is the receipient of 4 awards in the last few weeks, including 2 from Private Equity Wire and 2 from Alt Credit Intelligence.
Here is a selection of recent articles and studies about hiring, marketing and fundraising in the alternative investment industry:
Bloomberg: Hedge Funds Face Mounting Pressure With Diversity Questionnaire
Bloomberg: Most Funds Ignore Racial Diversity in Staff, Study Says
Chief Investment Officer: Alts Investors Expect Deal Activity to Return in 2021
FundFire: COVID Levels Field, But Will Women, Diverse Firms See Flows?
FundFire: COVID Speeds Up Hedge Fund Moves to Automate Sales Effort
FundFire: Emerging Managers Find Face Time but Not Much Capital
FundFire: Hedge Funds Offer Few ESG Options. Will It Change in 2021?
FundFire: Hedge Funds Face Global Regulator Scrutiny over 'Greenwashing'
FundFire: Hedge Funds Embracing ESG Grapple with Data, Engagement Challenges
FundFire: Hiring Ramps Back Up after an Icy Spring
FundFire: How to Launch a Hedge Fund in a Pandemic
FundFire: Multistrat Hedge Funds Lead Battle for 'Experienced' Talent
FundFire: Pandemic Highlights Opportunities for Mgrs to Hire Talent with Disabilities
FundFire: Pandemic Tightens Ties Between Marketing and Sales Teams
Institutional Investor: Redefining the Asset Owner Data Experience
Pensions & Investments: Managers find personal touch vital ingredient for fundraising
Pensions & Investments: Pandemic takes big toll on private markets fundraising
Pitchbook: Real assets fundraising tops $100B in H1
Private Equity International: Impact investing goes mainstream as big players arrive
Private Equity International: How can managers avoid greenwashing?
Private Equity News: New rule complicates private equity’s ESG push
Here are a few of the most interesting data points from Q3:
Alternative Hires by Quarter
- We tracked 437 marketing moves in Q3, an 8.44% increase from Q2 and +57.19% from 278 moves in Q3 2019. This brings the total for the year so far to 1,347, up by 53% from the 880 moves over the same period in 2019.
- The biggest movers and shakers for Q3 include: Hege Funds (86 moves), Private Equity (84 moves), Multi-Asset ﬁrms (62 moves), and Credit ﬁrms (56 moves). Of these sectors, Hedge Funds and Private Equity Firms received the biggest boost in the quarter with nearly double the amount of hires compared to Q1 or Q2.
- The sector that experienced the biggest slump in hiring activity in Q3 was Wealth Management with 34 moves in the quarter, a far cry from the 87 and 97 moves we saw in Q1 and Q2, respectively.
- Year-to-date, the clear leader is Multi-Asset ﬁrms with 283 total moves in the year, signiﬁcantly outpacing Wealth Management (218 moves), Hedge Funds (184 moves), Private Equity ﬁrms (177 moves) and Credit ﬁrms (157 moves). On the lower end of the spectrum are Real Estate ﬁrms (89 moves YTD) and Private Fund Groups (62 moves YTD), which are still relatively niche areas of the alternative investment universe.
- We added a new category for ESG hires, which had 25 moves in Q3. Please note that these hires include both marketing and non-marketing professionals hired for ESG-speciﬁc roles. Given that few marketers have ESG speciﬁcally in their titles, we thought it was important to capture the larger market for ESG professionals here as a precursor for what is likely to be future fundraising activity.
- Looking at the geographical data, North America (NORAM) continues to dominate hiring activity with more than two thirds (68.3%) of the moves thus far in 2020. But all eyes are on the UK for signs of a potential brain drain following the outcome of the Bexit debacle.
Data on Diversity
With diversity emerging as a top-of-mind issue for alternative investment firms in 2020, we dig deep into our data to see how well the alternative investment industry is improving diversity among the ranks of marketers.
- In Q3, we tracked 217 (151 female candidates + 61 male BIPOC candidates), representing just a smidge under half of all marketing moves in the quarter. This is a big improvement over the 37.5% diversity ratio we saw in Q2, but still a modest step down from the 53.6% figure in Q1.
- From a gender perspective, the 151 female hires fit neatly into the midpoint between Q1 (193 female hires) and Q2 (102 female hires). Overall, women represent nearly a third (33.1%) of all marketing hires year-to-date. Disappointingly, this is down from the 38.8% ratio we recorded for 2019, showing a trend in the wrong direction.
- In terms of racial ethnicity, we continue to see Caucasians make up the vast bulk of all marketing moves--78.0% in Q3 and 79.3% year-to-date. This is consistent with the 81.0% figure we recorded in 2019. The one place where there are some signs of improvement is in the hiring of marketing professionals with a South Asian (55 moves YTD) or East Asian (104 moves YTD) background, likely a sign of growing interest in the Asian institutional market. The hiring of Black marketing professionals (13 in Q3, 41 YTD) remains woefully low.
- While alternative investment firms continue to signal that they are taking diversity concerns seriously, the data shows just how far they have to go to make a dent in this issue. We continue to hope and to expect that diversity numbers will improve as some of the recruitment and training initiatives put in place earlier in the year begin to pay dividends. We also fully expect institutional investors to begin pulling their capital from firms that don't make tangible progress, an effective motivator to accelerate changes in hiring practices.
See below for a partial selection of current mandates. Contact us at email@example.com to learn more about each search.
HIRING: $300B Multi Asset Manager
DESCRIPTION: Our client is searching for a highly experienced individual to join an established team to run the distribution team globally from New York. The successful candidate will have a track record of globally building out products and teams; experience with liquid and long lock up product is a must.
HIRING: $18.5B Hedge Fund
ROLE: Head of Convertible Arbitrage
DESCRIPTION: Our client is searching for a highly experienced Portfolio Manager. The successful candidate will have a 7-10 year track record with impressive annualized returns; preferably this candidate will have some managerial experience.
HIRING: $4B Private Equity Firm with specificity in Life Science, Pharma and Healthcare
ROLE: Head of Marketing and IR, Product Specialist
LOCATION: NYC or Boston
DESCRIPTON: Our client, a $4 billion dollar AUM life sciences fund, is searching for a technically minded Head of Marketing and IR. The successful candidate will possibly have a health sciences education or is currently working at a healthcare or biotech fund. The role involves running the IR function for the fund and working closely with the CEO and founder on day-to-day basis.
HIRING: $10B Private Debt Manager
ROLE: Director, DACH
DESCRIPTION: Our client is searching for an experienced alternative private credit sales manager to target the DACH region. This successful candidate will have at least a five-year track record selling credit strategies in that region.
HIRING: $150B Private Equity Firm
ROLE: Head of Credit, COO Distribution
DESCRIPTION: Our client requires a highly experienced private credit investor relations and senior operations professional with a track record of facilitating road shows, fundraises and closing calls with LPs. This unique role will serve as a bridge between our client’s private equity and private credit platforms.
HIRING: Private Funds Placement Agent
ROLE: Head of Secondaries
DECRIPTION: Our client is launching a search for a Head of Secondary Advisory; the successful candidate will have a track record of origination and will work in collaboration with the primary side of the business, which is experiencing extraordinary deal flow currently.
HIRING: $50B Private Equity Firm
ROLE: Managing Director/ Principal, Distribution
LOCATION: NYC or Chicago
DESCRIPTION: Our client is looking to hire a capital raising athlete who has a track record of selling private equity, real estate, and secondary strategies across the East Coast. The successful candidate will have demonstrable relationships across the eastern seaboard and will bring energy and tenacity to the platform.
HIRING: $18B Credit Hedge Fund Manager
ROLE: Credit Analyst
DESCRIPTION: Our client is seeking a Distressed Credit Analyst. The ideal candidate will have a successful track record of identifying and analyzing distressed, stressed, special situations, high yield and event-driven credit, on a global basis, with an emphasis on the US. Importantly, this Distressed Credit Analyst will be responsible for developing investment and trading ideas, building and maintaining models, and working alongside and collaborating other analysts, portfolio managers and traders.
HIRING: Global Private Fund group expanding into the Secondary Transaction business
ROLE: Head of Secondaries USA
DESCRIPTION: Our client is searching for an experienced secondaries executive who can drive the business from the US and lead transactions. The role will also involve building out a team.
HIRING: $40B Private Equity firm with specificity to growth and credit strategies.
ROLE: Head of West Coast
DESCRIPTION: Our client is looking to hire a marketing professional with highly established relationships on the West Coast. The successful candidate will either be an up-and-comer or hold long-term relationships across the LP universe in the region.