NEW YORK • An MBA or experience as a securities analyst will no longer take you to the front of the hiring line. But if you're nimble with partial differential equations or wavelets, hedge funds want you.
Hedge funds that have relied on people to make bets are hiring quantitative analysts, or quants, like never before as they seek answers to lacklustre returns.
They are trying to catch up with the likes of Renaissance Technologies and Two Sigma Investments - leaders in using complex mathematical models for investing.
"I haven't seen demand for quants from hedge funds like this before - any hedge fund you can name is looking," said Mr Michael Karp, the chief executive of New York recruitment firm Options Group, who has been placing employees in the industry for 25 years.
King Street Capital Management, a US$19 billion (S$14 billion) New York fund, is looking to add an expert in big-data analysis, and US$11 billion Tudor Investment wants to hire quant traders and researchers as part of a revamp, said people with knowledge of the firms.
Balyasny Asset Management has posted at least five openings for quants on LinkedIn during the past month.
Scientists, mathematicians and programmers don't come cheaply. PhDs from top colleges can earn an entry-level base salary of up to US$150,000 a year at large hedge funds, while those with undergraduate degrees can get US$130,000, according to Options Group.
After five years, some quants enjoy a base of up to US$200,000 a year. Research analysts starting at a hedge fund, with up to three years of experience in finance, can be paid US$80,000 to US$100,000.
While Tudor's main managers now make investment calls with the help of quants, trading at systematic firms is more fully controlled by computer models.
A handful of firms have hired quants to mine data for investment patterns and develop machine learning tools, a type of nascent artificial intelligence.
"Our data needs for fundamental analysis are massive," said Mr Clayton DeGiacinto, the founder of Axonic Capital, a US$2.8 billion hedge fund in New York.
"A lot of wealth will be built by those who are able to synthesise large amounts of information more quickly and efficiently," he said.
Traditional hedge funds sometimes have trouble recruiting quants, who prefer the casual atmosphere of tech firms.
"Hedge funds might not necessarily be the right fit for some quants," said Ms Jeanne Branthover, a partner at recruitment firm DHR International in New York, who has seen the number of job searches for quants double since the start of the year.
"In Silicon Valley, you have a cool factor. Hedge funds need to change their culture to catch up," she said.
Mr Jason Kennedy, the founder of recruitment firm Kennedy Associates in London, said he currently has 15 quant job searches for hedge fund clients. He had none a year ago. Yet, some funds have been slow to catch on.
"That's because hedge fund managers already made their money without the need of advanced technologies," said Mr Kennedy.