GAM: Looking For Mr./Ms. Risk-Taker

A hedge fund that’s built its business around the creed that risk is good is finding it hard to attract that type of talent.

A hedge fund that’s built its business around the creed that risk is good is finding it hard to attract that type of talent. GAM, the largest single hedge fund in the world (as opposed to Man Group, which is made up of several smaller funds it had acquired), tells the Financial Times that now that HF managers have succeeded in attracting tons of cash from institutional investors, they prefer to remain cautious and conservative, and hold on to their fees rather than do what HFs became famous – and rich – for. “Our challenge is to find new managers who are prepared to take risk,” David Solo, CEO of GAM, said in an FT interview. “The whole original motive was bringing talented managers into a supportive environment and allow them to take considerable risk when they saw real opportunity.” These days, GAM is satisfying its risk appetite by investing in a bevy of start-up hedge funds by former investment bankers, who are more eager to take risk. In fact, according to the FT, 75% of GAM’s $20 billion AUM is invested in HFs less than 12 months old. These newbies don’t stick around forever, usually about two to four years, until about the time they reach their goals, and their enthusiasm starts to wane.