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2013 Business Expense Benchmark Survey
performance, there is a dramatic decrease in the pace
of investment management personnel growth. After
having doubled at each interval previously, there is
instead only a 38% rise in the average number of
investment management personnel, from 34 to 47
heads, that occurs as firms grow from $5.0 to $10.0
billion AUM.
The reason that this is so noticeable is that the pattern
picks back up as firms grow from $10.0 billion to our
>$10.0 billion AUM average of $36.4 billion AUM.
Headcount rises to 137 investment management
personnel—a figure almost double the 68 who
would have been expected at the $10.0 billion AUM
threshold, and the amount of AUM per investment
management head increases $55 million/head, from
$211 to $266 million.
Our explanation of this slowdown in investment
management personnel growth toward the
$10.0 billion AUM mark is that firms must realign
their operational strategy and their technology
platform in order to continue growing their investment
management team, and to continue to increase
their AUM.
Positioning for a New Wave of AUM Growth
Most firms under the $10.0 billion AUM level build their
organization around a primary portfolio manager
and fund. The majority of firms that are larger
than $10.0 billion AUM are either multi-manager
platforms or are expanding their product range to
incorporate long-only and /or regulated alternative
offerings. Realigning their team and their capabilities
to support this shift in approach requires an
investment in support personnel before the firm
is ready to reinvigorate their growth in investment
management personnel.
Chart 16 shows a dramatic spike in the ratio of
investment support to investment management
personnel at the $10.0 billion AUM level. This marks
a significant variance from what is evident at every
other AUM mark. At $100 million, $500 million, $1.5
billion, $5.0 billion and $36.4 billion AUM, 40% to
47% of the personnel at the hedge fund are in the
investment management function and 53% to 60%
of the personnel are in either investment support
or business management. At the $10.0 billion AUM
threshold, 32% of the personnel are in investment
management and 68% are in investment support.
What is also quite interesting is that this spike in
investment support personnel at the $10.0 billion
AUM mark occurs in every cut of our survey data.
Chart 17 shows that the ratio of investment support to
investment management personnel jumps whether we
look at the data by region, by strategy or by vintage.
In all these instances, there is a clear imbalance as
firms move from about a 55/45 split to a 65/35 split
or greater. It is thus clear that there is a significant
Source: Citi Prime Finance. Total dataset examined (124 firms, $465 billion AUM)
$25M
$63M
$106M
$151M
$211M
$266M
$100M
$500M
$1.5B
$5B
$10B
>$10B
0
40
60
80
100
120
140
160
NUMBER OF INVESTMENT MANAGEMENT PERSONNEL (LINE)
20
AUM PER IM PERSONNEL (BAR)
0
50
100
150
200
250
300
Chart 15: Investment Management Personnel vs. AUM per Head
189% Increase
in headcount
26% Increase
in
Average AUM per head
4
8
15
34
47
137