A top hedge fund recruiter explains the 4 most misunderstood aspects of hedge funds

source
Ilana Weinstein

  • Ilana Weinstein is the founder of The IDW Group, which focuses on recruiting investment talent for all kinds of investment strategies.
  • We asked Weinstein about the biggest trends in the hedge-fund business and how to get a senior-level job today.
  • She says there are four major misconceptions people have about the industry.

llana Weinstein, founder of the The IDW Group, is a tour-de-force within the hedge fund industry.

She recruits top-level talent for the world’s most prestigious investment firms including hedge funds, family offices, and private equity funds.

Weinstein recently sat down with Business Insider’s hedge fund reporter Rachael Levy for a wide-ranging interview about the industry. She says there are four major misconceptions people have about the hedge fund industry. Here’s more from the interview:

Levy: What is the most misunderstood aspect of the hedge-fund industry by hedge-fund investors?

Weinstein: Four things:

  • How lean these investment teams are. You can be a $10 billion-plus fund and have a team of five to 10 people if it’s a single-strategy fund. That means it is critical that everyone contribute in a meaningful way, but that is often not the case.
  • The strength of investment teams is lumpy. You may say, “so what?” but when the team is lean it matters. This is obfuscated when fund performance is good because everyone is happy and doing well and there is less individual accounting going on. Over the last few years returns were more challenging and it became clear who the stars are. If they leave it’s a problem.
  • Right now many talented people are unhappy and in-play LPs should know the hedge-fund industry is like a giant Jenga puzzle. All you need is a few key people to leave, returns drop, and the whole thing comes crashing down. If I’m an LP, I want to know who is key on the team and likelihood of them leaving. I don’t think anyone has this bird’s-eye view but us.
  • “Turnover” is not a bad word. Founders are often afraid of letting people go because of the perception of turnover by LPs. LPs should encourage founders to prune their team. This also makes room for talented people to grow and not be as vulnerable to our call. The key is for LPs to diligence who drove the turnover (founder or the person who left) and what the reputation is of the person leaving. The story that gets spun after the fact is often not the reality.

You can read the full interview with Ilana Weinstein here .