Alternative Mutual Funds: The Demand for Compliance Professionals
As the financial landscape for companies in the financial services sector gradually improves, hedge funds are capitalizing on this by introducing new financial products to diversify their investor base. For example, a 2013 Morningstar study found that mutual funds are becoming the dominant vehicle used by both financial advisors and institutions to access alternative strategies. In fact, alternative mutual funds, often referred to as “liquid alternatives,” can employ many of the same strategies and techniques as hedge funds. However, industry shifts along with constant regulatory changes present hedge funds with the challenge of finding and hiring the right talent they need to help manage their alternative mutual fund investor base.
“Hedge funds are now looking to hire professionals that understand the ins and outs of mutual fund regulations and can help them avoid any potential compliance pitfalls as they move into the registered fund space,” says Stephanie Tancredi, Director of The Execu|Search Group’s Financial Services division. “In order to successfully broaden their product base to include liquid alternatives, hedge funds are now in need of the distinct skill set professionals in the mutual funds capacity possess.”
Therefore, those with mutual fund experience and interest in transitioning into hedge funds, there’s no better time than now. Our financial services recruiting specialists recommend highlighting any of the following three skill sets throughout your job search and interview process.
Investment Guideline Monitoring – If a hedge fund moves into the liquid alternatives space, it is subject to a variety of new rules and regulations, and must monitor its investment portfolios for additional restrictive covenants pursuant to the Investment Company Act of 1940. Mutual funds are required to provide daily liquidity to investors and subscribe to a set of trading rules that govern how they invest their capital. In order to do so effectively, these funds need to ramp up and add additional compliance resources, both in terms of technology and human capital. “Compliance professionals that work at traditional long-only asset managers, who have experience with investment guideline monitoring, possess a skill set that is now in demand at many elite hedge funds,” says Stephanie.
Regulatory Filings – In addition, regulatory filing is another area in which legal and compliance professionals from the mutual funds market can provide crucial support to liquid alternative investments. “Registered ’40 Act funds have additional filing requirements that many hedge fund attorneys are not familiar with. It is a very specialized skill set that has become increasingly valuable,” says Stephanie. So, if you have experience in either a compliance and/or regulatory capacity, your background will be in demand for liquid alternatives at hedge funds.
Marketing Material Review – Constantly changing rules and regulations will impact the way hedge funds can market to their investor base. According to Stephanie, “Since the vast majority of hedge funds haven’t historically marketed to the general public, they’ve never needed professionals to create and review promotional materials to share with an investor audience.” As a result, hedge funds attempting to expand their investor base will need to invest in the right finance professionals that can effectively market to the public through compliant methods. These types of roles look at marketing documents to ensure all information shared isn’t misrepresented or improperly disclosed in any way.
