Hedge fund Man Group’s tightening of non-compete terms prompts pushback
Move comes as FTSE 250 company battles to retain talent and combat a falling share price
Man Group has pressed employees to sign stricter non-compete agreements sparking internal resistance, as the company contends with a run of poor performance and a fierce industry-wide battle for top talent.
In February, investment staff at the world’s largest listed hedge fund group were told to sign agreements that would extend the length of time they would have to wait before joining a competitor after leaving the firm, three people familiar with the matter told the Financial Times.
Two of the people said that management received pushback over the move, while a third person said the move had prompted some staff to explore options at rival firms.
“The firm’s decision to expand non-compete agreements earlier this year was restrictive to certain investment teams and consistent with industry standards amid an increasingly competitive talent landscape,” said Emma Holden, chief people officer at Man Group.
The length and restrictiveness of non-compete agreements vary across hedge funds and depend on role and seniority. At top hedge funds, portfolio managers may have to sit out of the market for as long as 18 months to two years, while an analyst might have to wait a year.
The biggest hedge funds have been embroiled in a fierce war for talent with portfolio managers and top analysts receiving multimillion dollar signing bonuses and high profit shares.
Many hedge funds have been deferring a proportion of traders’ earnings and extending non-compete clauses to try to prevent staff from leaving for competitors.
Longer non-compete terms were “definitely one of the results [of] this so-called war for talent”, said a business development executive at a top US hedge fund. “It’s harder to find good people so you do everything you can to keep them.”
London-listed Man, which manages $193bn in investor capital and has 1,700 employees, is one of the world’s best known hedge fund brands, investing across a wide variety of strategies and assets. It is best known for its quantitative hedge fund unit AHL, which makes money by betting on market trends using computers and vast amounts of market data.
The FTSE 250 company, led by chief executive Robyn Grew, takes pride in an open, academic culture that encourages collaboration and the discussion of complex ideas. Its executives have also touted the benefits of flexible working, a fact that is seen internally as a competitive advantage compared to many other top hedge funds which demand daily office attendance.
But one of the people familiar with the matter highlighted the discrepancy between what he saw as the firm’s supportive work culture with the desire to prevent employees from leaving by tightening legal agreements.
Man Group’s share price has fallen 30 per cent over the past 12 months as the computer-driven strategies it is best known for have struggled to perform amid a trade war initiated by US President Donald Trump.
Earlier this year, 150 London-based quants at the company were told to come into the office five days a week for an “all hands on deck’ cross-team research project”. The diktat applied between May and the end of July.