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New Managers January 2020

PERSPECTIVES: How to build a lasting hedge fund business

 

How to build a lasting hedge fund business As of July this year, about 66%, or $861bn, of total worldwide hedge fund assets were controlled by the 25 largest managers and 41% by the 10 top firms (Bridgewater, Renaissance, Man, AQR, Two Sigma, Millennium, Elliott, BlackRock, Citadel and Davidson Kempner) according to P&I. What are the biggest hedge funds doing to remain in the top league over the long-term - and retain more than half of the industry assets? It may be that it is not just their investment process or their capacity to scale up, it is also the type of leadership and business culture they follow. That's according to the two founders of Jersey Citybased quantitative trading firm PlusPlus Capital, who don't just believe in good business but in great business. A great business, whatever it is, starts with two things, explains co-founder Kapil Rastogi during a recent Opalesque TV interview. That is, great leadership and great culture.

Leadership

He is a strong proponent of the Servant Leader model. "What does that mean in the context of a hedge fund?" he says. "It means I cut my paycheck before I reduce my employees' paychecks or even lay off an employee. I never ask an employee to do something which I am not willing to do myself, whether it be mopping the floors, cleaning data, or just getting a latte from Starbucks. The whole idea is that you're serving your employees rather than your employees serving you." Servant leadership seeks to move management and personnel interaction away from "controlling activities" and toward a more synergistic relationship among parties. The term "servant leadership" was coined by Robert Greenleaf, a twentieth-century researcher. For example, a servant leader might question how their efforts uplift those who are underrepresented or are from lower economic standing before seeking to attain a position of control, according to Investopedia. ......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.
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