Hedge Funds, Banks Rush to Hire Traders as Markets Turn Volatile

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(Bloomberg) — Extreme market swings from metals to currencies are fueling a hiring push at hedge funds and banks as they seek traders who can capitalize on surging volatility.

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Among the prime targets for multi-strategy firms are specialists in so-called volatility arbitrage, a way to profit from the difference between the price swings the market expects and those that actually occur.

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“In the last few days these guys have printed money,” said Tony Ernest, managing partner at hedge fund talent consultant Monroe Partners Asia. “As Trump has been in the seat and the markets have been increasingly volatile, they have been in demand.”

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Japanese securities firms are rushing to hire currency and fixed-income traders, said the founder of a recruitment company in Tokyo. One of Australia’s largest banks, fresh off its best month for trading revenue in nearly a decade, plans to hire in areas including commodities, according to an executive who asked not to be identified discussing private matters.

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These moves show the upside of a series of market tremors that have left some investors nursing heavy losses — and encouraged others to make efforts to cushion themselves against further selloffs.

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The turmoil has been widespread. Gold suffered its biggest decline in four decades. Japan’s government bond market endured a $41 billion meltdown in just a few hours. The dollar and the yen have fluctuated wildly. Indonesia’s stock market was hit by a selloff so violent that the country’s top financial regulator and the head of its stock exchange both resigned.

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While volatility inevitably leaves some investors in the red, it also creates chances for swing traders and intraday specialists to make money. Rising trading volumes boost revenue for banks and brokers. Price dislocations create ways for arbitrageurs to pick up quick profits.

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The recent spike in volatility has simply created more opportunities to trade, said Nick Bird, whose Hong Kong-based quant hedge fund firm OQ Funds Management oversees just over $1 billion. 

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Braced for Turmoil

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Not everyone is so sanguine. Although most money managers are a long way from panic mode, many are bracing for more turmoil on what has already proved to be a wild year.

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Australian Retirement Trust, the country’s second-biggest pension fund, is reducing its exposure to the dollar and shifted toward the euro, yen and pound, said Andrew Fisher, head of investment strategy. Debt funds in Asia including at Aberdeen Investments are looking to boost their exposure to bonds that have a lower correlation with the US. 

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AMP Ltd., a Sydney-based pension and wealth manager, has decided not to roll over its exposure to private credit on fears the $1.7 trillion market has become too frothy, said Stuart Eliot, head of portfolio design and management for the firm’s investment arm.