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Hedge funds hiring from resumes are making a horrible mistake

Next time you put together a resume in application for a hedge fund job you might want to reconsider your approach. By relying on your CV to get a position, you are exposing yourself to all sorts of human biases.

So said Sham Mustafa, co-founder of quantitative assessment specialist Correlation One at a London Quant Conference today. “Don’t look at the resume, look at the performance,” said Mustafa, addressing attendees from quant funds. “- If you start looking at resumes first, you have implicit biases built-in.”

Given that he runs an assessment firm that specializes in selecting candidates on the basis of quantitively-measurable performance, Mustafa himself might well be biased against resumes. However, as might be expected, Correlation One has data to back-up its approach.   

Earlier this year, Correlation One ran a recruitment program for a quant trading firm. Instead of submitting resumes, candidates were invited to develop and upload stock market prediction models based on training data. 4,000 people from 100 different countries applied. Mustafa said the results were both expected, and not.

“The people you would expect to perform well from top universities did well, but we also had participants from countries like Latvia, Bulgaria and New Zealand who did very well,” said Mustafa. “The winner of the competition was from Russia and was not at a university anyone here would recognize,” he added. “ – When you create a filtering process that assesses talent, you can find diamonds in the rough.”

That quant firm isn’t alone in using competitions to sift talent. Correlation One has also worked with Citadel, the $30bn+ hedge fund run by Ken Griffin. Citadel ran 25 ‘datathons’ between 2017 and 2018 and Mustafa said the fund built an “assessed talent pipeline” of over 25,000 people through the program. Traditional recruiting processes were “ripe for recruitment,” declared Citadel’s lead recruiters at the time.

Instead of focusing on pulling-in candidates with shiny resumes from top universities, the new way is to draw-in as many different sorts of people as possible and to assess them en-masse. “Great talent isn’t just sitting at the top universities around the world, it’s globally distributed,” said Mustafa. “You need a broad funnel and then a precise filtering mechanism to process the funnel.”

Correlation One claims to have developed just that filtering mechanism. Mustafa said the company’s quantitative tests are “five times more reliable than GPA” in predicting performance.  “In a standardized recruitment process, the candidate from Russia would not have been picked as a top performer,” he said.

If you come from a non-target university, your resume may therefore be doing you a disservice. Instead of inviting a human being to assess your suitability for a job with a quant fund, you could be better-off entering an investment competition and letting your performance speak for itself. 

Photo by Malik Earnest on Unsplash

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AUTHORSarah Butcher Global Editor
  • pe
    8 November 2019

    CV's only tell part of the story, to truly understand what a candidate is capable of doing would be to have them develop a model or write code with a desired outcome.

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