The Investment Management Finance function at Morgan McKinley operates exclusively within the London market focusing on newly-qualified accountants to financial director level.
Supported by a dedicated research function we are constantly updating our network of senior individuals, providing consultative advice and expert market knowledge. We cover the full spectrum of finance hires on both a contingent and retained basis and are a recruitment partner to many of the world’s leading investment management organisations.
Following on from a stellar year across the fund management industry in 2015 in terms of growth and market confidence Q1 2016 can be best described as “challenging” despite the overall feeling of a solid market with long term potential. In contrast to the short term volatility of the market the long term outlook for the industry remains positive. The worlds ageing population has had a positive effect on the launch of new pension funds and we have seen more and more new initiatives across the industry and across the nation as a whole to encourage employees to save. Furthermore the majority of asset managers are still predicting positive returns in markets such as equities by the end of 2016 and believe that a sudden change in market sentiment could reverse any losses the fund management industry has suffered.
Large scale redemptions from funds have been common place in 2016. In January alone investors withdrew more than $60 Billion globally from mutual funds which was the largest monthly outflows since the financial crisis according to Thomson Reuters. The global markets sector had its worst start for two years as oil prices fell to their lowest level since 2004 and fears continued to rise about the slowdown in China. State funds and Sovereign Wealth fund redemptions continued to fall as state funds in oil-rich nations withdrew billions of dollars from investment houses to prop up their economies because of the fall in the price of oil.
The standout hedge fund strategy so far in 2016 has been managed futures or commodity trading advisers
Increased regulatory scrutiny in 2016 will be forced upon asset managers which are likely to put prices up but will have a positive effect for new regulatory finance positions which we have seen a steady increase in since this process began in mid 2014. The UK watchdog has undertaken a review of the industry which will be published later on this year and confirms the shift in regulatory scrutiny away from the banks and insurers and towards the asset managers. Individuals working in smaller boutique asset managers who have greater exposure to regulatory accounting may find themselves in demand throughout 2016.
The hedge fund industry had a tough start to 2016 as overall fund performance fell 2.76% in January according to Hedge fund research, which was higher than the S&P 500 benchmark which fell 5% during this time. Analysis of the hedge fund markets performance is somewhat more complex with significant differences in returns across different hedge fund strategies with good performances across equity markets and high-yield fixed income
Nevertheless there are a number of top performers emerging. The standout hedge fund strategy so far in 2016 has been managed futures or commodity trading advisers. These strategies are not correlated to long-only benchmarks and are actually hedging their portfolios. Most CTAs have been short, and with the markets selling off they have done well during the first three months of the year and as a whole systematic traders are up around 6% this year.
At Morgan McKinley we have seen the knock on effect from this trend with an increase in demand for front and back office professionals from a Top 10 background to move into their first position in a hedge fund. Those who have completed a rotation scheme in a leading Investment bank after leaving practice have been most in demand as we continue to see a shift of individuals from the large investment banks to hedge funds where a greater exposure and bonus potential has been a key driver.
The finance team at Morgan McKinley had a record number of permanent mandates in January.
As reported, 2015 was an excellent year for private equity and venture capital investments, however 2016 has started on a slightly tepid note with private equity deal making remaining weak, while venture capital firms were turning cautious on backing start-ups in the first three months. The number of private equity buyouts was similar to Q4 2015 however the deal value was around a third of this figure. From a venture capital point of view the Q1 results are both good and bad. Those looking for their first cheque are more likely to get that initial influx of capital but those companies looking for a greater investment may struggle.
Despite this we have continued to see a surge of new positions in the VC and PE space with clients looking for hands on experience mainly from ACCA and CIMA qualified backgrounds. The majority of our clients will look for specific experience in this field however for some less technical positions we have seen that our core private equity and venture capital clients happy to look outside of this space and in some cases even financial services as long as the skill set and fit for the business is achieved.
Property Investments across retail, commercial and residential has continued to be solid. The fund management team at Morgan McKinley has continued to see an influx in property investments roles across the front middle and back office as new UK and Pan European Real Estate funds have being launched. Our key clients have continued to launch new funds with record amounts of capital being raised surpassing targets. It is predicated that rental charges across all three major property types are set to increase by 2.2% this year.
We are expecting to see more movement from Investment Banking into the private equity and hedge fund space
Despite the contrasting market performance when compared to Q1 2015 the finance team at Morgan McKinley had a record number of permanent mandates in January. The majority of hires being Finance Manager Roles with 2-5 years PQE or part qualified accounts looking for a wider remit of responsibility. Due to the continued high performance of property funds we have seen an influx of individuals looking to move from property management companies to gain fund experience within the sector. Bonuses were overall flat for 2016 with average being 19% and the introduction of carry schemes within private equity companies especially has risen to encourage and incentivise individuals to build a career with the company.
Looking forward to Q2 which is historically the busiest time of year for both new and replacement hires we are expecting to see more movement from Investment Banking into the private equity and hedge fund space with many mid-tier firms determining that hiring front office junior-level individuals to work on existing deal flow as a fundamental requirement, despite uncertainty in the market. With more companies having continued systems implementations and the changes to paternity leave we are expecting to see increased contract mandates throughout the next three months.
Confidence still remains high within the Investment Management space and it is still the most attractive market to work in 2016 within financial services.
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