European fund managers are meant to be slow and steady, but a new survey shows them to be distinctly fleet-footed: staff turnover in the fund management industry is high. Surprisingly, hedge funds are not the culprit.
More than 70% of fund management groups have experienced staff turnover in the past year according to the survey by Morningstar, a US research firm. Almost 5% of respondents said 25% or more of their fund managers had left.
Contrary to popular perception, not many of the leavers were destined for higher paying positions in the hedge fund industry. Only 10% of the fund management groups said staff were off to the glamorous alternative investment sector. Smaller asset management firms and boutiques drew 23%.
The survey covered 50 fund management groups in the UK and Europe with an average of €54bn ($66bn) and 99 funds under management. Participants included Aberdeen AM, Fortis Investments, Axa IM, Invesco and UBS Global AM.
High staff turnover is taking its toll on fund managers' slow and steady ethos. Thanks to departures, the survey found 40% of funds to be managed by the same person for only two to four years.
Fund managers are doing their utmost to hold on to managers for longer: one third of respondents said they've set up boutique structures within the firm to tempt staff to stick around, and 40% said they've increased salary and bonus payments.
They have good reason to do so. The dangers of losing top fund managers can translate directly into lost mandates. Take Deutsche Asset Management as an example. In the past month the fund has lost five pension fund mandates with a combined value of more than 3bn.
The losses follow the departure of seven senior members of staff during the past four months, including its chief investment officer, chief executive, head of asset allocation and co-head of European equities.
Attempts to retain staff with big salaries, however, may not be good news for investors. Only 15% of the groups Morningstar surveyed rewarded managers for their performance over three or more years. In most cases one good year was enough to merit a big payout.