RETURN OF THE STAR MANAGERS

The war for talented asset managers is hotting up, with remuneration going through the roof. Bloomberg has reported on Marshall Wace adding a new client fee - not that Marshall Wace has ever been backwards in coming forwards - to pay for ever more expensive talent. This is called a 'compensation surcharge' and sits in its Eureka fund, which is as much as 0.75% of the fund value. While this is an extreme example, there are signs of big signing-on bonuses and high costs - DE Shaw, Citadel, and Millennium are all firms paying top dollar. Whether this is a return to the star managers remains to be seen, but we have already been through that cycle once before, and it didn't necessarily end well.