Hedge Funds Opt for Some Days of Remote Work—at Least for Now

Most hedge funds plan to let their employees work remotely at least one day a week starting in September -- a more flexible approach than Wall Street banks that are already summoning staff back to the office.

What many senior managers aren’t saying openly is that such accommodations may not last.

A May survey from the Managed Funds Association, whose members include mostly hedge funds with at least $1 billion of assets, found that 80% of firms would offer some sort of hybrid model starting in September. The most popular schedule is three days a week in the office, with remote work on Mondays and Fridays, the trade group said, without providing the percentage of firms signaling a preference for that arrangement.

The schedule reflects that “firms understand their workforce wants and needs more flexibility as they migrate back to the office,” said Brooke Harlow, the association’s chief commercial officer.

Yet a more nuanced picture emerges from conversations with hedge fund managers, many of whom declined to discuss their plans publicly.

“Most senior people are seeing hybrid arrangements as a step toward people being full-time in the office, while employees see it as a more permanent best-of-both-worlds solution,” said Casey Schaffer, who heads the U.S. talent and culture transformation practice at Capco, a consulting firm to the financial-services industry.

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Which side ultimately wins will hinge on each firm’s ability to keep and hire employees in an already challenging market, she said.

“Leaders have to realize that competition for talent isn’t just from the bank or hedge fund across the street, it is from startups and tech companies” that generally have much more liberal remote work policies, Schaffer said.

So far, Wall Street seems less concerned about its ability to hire. Goldman Sachs Group Inc., Morgan Stanley and other large banks have told employees that most or all of them are expected back in the office as the percentage of people vaccinated for Covid-19 continues to rise.

About two-thirds of hedge funds that responded to the MFA survey said their offices were open, with less than 30% of the workforce already back. Some larger firms have already made their post-summer plans known.

Ken Griffin’s Citadel, with almost 2,400 employees, has mostly reverted to its pre-pandemic routine. The firm resumed regular operations in New York, Greenwich and Chicago offices this week, and Texas-based employees returned last month, according to a person familiar with the matter.

Izzy Englander’s Millennium Management, with about $50 billion of assets, said employees will be back in the office three days a week on a trial basis beginning in September.

Bridgewater Associates, the world’s biggest hedge fund, told staff to come in two days a week starting Sept. 7 -- with one of those days mandatory for everyone. Two Sigma Investments -- a quant firm that competes for talent more closely with technology companies -- is also moving to a two-day-a-week model.

One compromise to get people into an office, yet still offer flexibility, is to open satellite locations closer to where people live. Larger firms such as Millennium, Citadel and Canyon Partners have established outposts in low-tax states like Florida or Texas where some people moved during the pandemic. Other firms have secured space in Connecticut or other New York suburbs to shorten commuting times.

But employees who move to more affordable locales from New York might not keep their current salaries. About a quarter of firms would consider changing the pay structure for those who relocate away from the main office, according to the MFA survey.

While those cuts wouldn’t affect portfolio managers and other investment professionals, mid- and back-office people as well as other non-investment staff such as lawyers and accountants eventually could see lower compensation, said Gary Goldstein, chairman of executive search firm Whitney Group.

As Covid-19 cases in New York decline and vaccinations rise, however, he’s hearing less about firms rushing to find new offices outside of the city.

“The discourse has already faded,” Goldstein said.

©2021 Bloomberg L.P.

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