Study: Hedge Fund Success Driven By 'People Alpha'

Oct 22 2013 | 9:42am ET

Humans uncomfortable with the designation 'resource' take heart: you've been reclassified as 'people alpha' and, according to a new survey from Citi Prime Finance, you're a valuable hedge fund asset.

Citi says hedge funds that invest in 'people management' register higher average returns than their presumably neglectful peers.

“Just as hedge funds once claimed ‘operational alpha’ as a differentiator, we believe that ‘people alpha’ will separate some firms from the pack and will soon become an industry norm,” said Citi's Sandy Kaul in a statement. 

To quantify the benefits of 'people alpha,' Cit interviewed 24 hedge funds with at least $500 million in assets under management, evaluating their practices in terms of talent acquisition and retention, learning and development and performance management.

Perhaps unsurprisingly, firms that employ more people scored higher in their focus on 'people-related matters' and firms that offered extended benefits packages, flexible workplace arrangements and workplace perks scored well in talent retention.

Firms that do well at retaining talent also tend to do well at attracting it in the first place, via internship programs and active recruitment.

“As the industry continues to mature, sophisticated investors will assess hedge funds’ adherence to people management as a standard part of industry due diligence,” said Kaul.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.