Amid the rising cost of living and higher taxes, top hedge fund talent is moving away from financial centres like London and New York to the UAE, Saudi Arabia, Kuwait, and Bahrain, according to headhunters.
This year, global hedge funds such as All Blue Capital and ExodusPoint Capital Management opened offices in Dubai.
All Blue Capital moved its corporate headquarters from London to Dubai in March and relocated most of its team from the UK’s capital. The firm did not respond to Financial News‘ request for comment on the number of staff that moved.
In June, ExodusPoint incorporated its Dubai entity at the Dubai International Financial Centre and hired Bhavit Sawjani, former head of European high-yield credit trading at JPMorgan, as head of DIFC.
London held onto the title of the world’s leading financial centre in 2021 after scoring highly in areas such as technology and innovation, according to a study by the City of London Corporation. However, the city lagged behind New York and Singapore in access to talent.
As New York inches closer to London to dethrone the City, the capital’s grip on being the most sought-after destination for professionals is teetering amid an outflow of the top hedge fund talent to the Middle East.
Austen Smart, a hedge fund headhunter and managing director of London and Dubai-based recruiter Tighe International, told Financial News that remote working has made locations like Dubai and Abu Dhabi attractive.
“With the continued shift to work-from-home, we’ll see less top talent choose the usual epicentres,” Smart said. “Amid rising inflation and cost of living, unless drastic tax changes happen in the UK and EU, talent will be driven towards the Middle East and North Africa — Abu Dhabi, Dubai, Saudi, Kuwait, and Bahrain.”
Dubai is not the only Middle Eastern city to grab the attention of global hedge funds. In August 2021, London-based hedge fund Florin Court Capital partnered with the Abu Dhabi Investment Office to establish a trading, research, and operations hub in the Abu Dhabi Global Market.
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For hedge fund managers, low tax rates in the Middle East and its favourable location are some of the key reasons behind the latest trend.
A Dubai-based senior portfolio manager who joined a leading hedge fund earlier this year told FN that Dubai is a very convenient place to live without the pressures of a mega-city like New York or London.
“[My] routine is incredibly efficient in Dubai as I live 500 metres from my office in Dubai International Financial Centre. Apart from work, it gives me a lot more time to read, exercise and think. To summarise: I am living life. Life isn’t living me,” they said.
Easy access to the Middle East for family reasons has also been a contributing factor in the decision over where some hedge fund managers want to base themselves professionally.
“Another big reason is my parents and sibling and extended family all live in India and in a post-Covid world, I want to spend more time with them now… It has been great from that angle as well,” the senior portfolio manager added.
Seán Sweeney, managing director at CW Talent Solutions, said that Dubai is set to become the fastest-growing region for hedge funds over the next few years.
“Every big player in the hedge fund industry will have [an] office in Dubai by 2025,” Sweeney told FN. The city has low income tax rate, sun all year round, and a very low crime rate. You can leave your phone on the table in Starbucks to reserve a seat, you wouldn’t do that in London.”
“Dubai’s location and time zone are also advantageous for global strategies,” Sweeney added.
The UAE introduced a remote work visa scheme in March 2021 to attract top talent across different sectors. Due to a comparatively flexible work environment at hedge funds post-pandemic, several portfolio managers are moving out of typical financial hubs to Middle Eastern locations.
Patrick Ghali, co-founder of hedge fund adviser Sussex Partners, said that the Middle East’s rising popularity among hedge fund talent is not a significant threat to usual financial epicentres for now.
“London, New York, Hong Kong and Tokyo will continue to attract most of the talent. However, it is conceivable that Dubai will grow over time,” Ghali told FN.
The global hedge fund industry has witnessed many ups and downs this year. While macro funds saw a bumper year in 2022, equity hedge funds struggled, making hedge funds focus more on macro hiring than bringing in talent with skills in long-short equity trading.
However, with equity hedge funds making a comeback in the last quarter of 2022, Smart sees a turnaround in equity hiring next year.
“If market conditions remain the same, then I see continued growth in macro, relative rates and foreign exchange, but with additional hires in emerging markets fixed income and especially emerging markets FX based on waning dollar power,” he said.
To contact the author of this story with feedback or news, email Bilal Jafar