Hedge fund Marshall Wace is imposing a new fee on clients to pay for money managers as it looks to hire and retain top talent in a fiercely competitive recruitment market.
(Bloomberg) — Hedge fund Marshall Wace is imposing a new fee on clients to pay for money managers as it looks to hire and retain top talent in a fiercely competitive recruitment market.
The London-based firm’s main $22.5 billion Eureka hedge fund is asking for an additional “compensation surcharge” worth as much as 0.75% of the fund’s value, according to an investor letter seen by Bloomberg. It will be used to reward those who outperform, it said.
Marshall Wace is fighting with the world’s biggest hedge funds for a limited pool of talent amid surging demand for steady returns in a volatile market. Millions of dollars in signing bonuses, a higher cut of trading profits and payouts for non-compete periods are now becoming the norm.
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“The multi-manager platforms are driving a bidding war for talent,” Paul Marshall, the co-founder of the $63 billion investment firm, wrote to clients.
“Their modus operandi is transactional, associated with high employee turnover, and is a complete antithesis to the culture of Marshall Wace, which is characterised by long-employment duration and a highly collegiate environment. However, it is imperative that we acknowledge the shifting dynamic in the market and ensure our firm and its funds remain positioned for success,” he added.
The new charge is capped at 0.75% annually, with Marshall Wace footing the bill if the costs exceed. It comes into effect on Oct. 2.
Eureka is the firm’s flagship fund and is managed by Marshall. The fund runs a basket of roughly 15 sub-strategies, which are led by sub-managers. The fund is up 2% this year and has annualized gains of almost 12% since launch.
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