Tuesday, August 6, 2024

What is the right amount of investment staff?

 

The article "The unusual thing about Citadel versus other multi-strategy hedge funds", provides some interesting insights on the composition of investment staff associated with the largest multinational-strategy funds. The investment staff vary between 39% and 56% as a percentage of the total staff. These percentages tell us something about the firm strategy. A higher percentage of investment staff suggests that there is a greater focus on strategy pods while a lower number suggest that there is a more singularity of thinking about investments. It also tells us something about how first think they can create an edge. The lower investment staff percentage suggests that there is the view that an edge can be created by technology and not just investment acumen. There is no right answer, but the cost of running a multi-state is much higher than what some may think. There is a clear need for strong infrastructure to support all the trading and research that is being conducted.

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