WEST PALM BEACH, FL (www.hedgeco.net) – Traditional money managers such as mutual funds and others have continued to face real challenges coming from the brain drain of its best money managers to the growing hedge fund industry. Since the late 1990’s traditional money managers have been crossing over to the hedge fund industry, being attracted to better compensation packages offered by hedge funds, which often includes performance pay in addition to the base salaries.

Mario Gabelli chairman of GAMCO Investors Inc, said, “That the brain drain for traditional money managers is real, explaining that traditional money managers are handicapped to compete with hedge funds on compensation packages. There is also a lower regulatory barrier for new managers in the hedge fund industry compared to the mutual fund industry. Hedge fund managers have more freedom to use different investment strategies in trading.”

Gabelli told conference attendees at the Reuters Hedge Fund Summit, “A hedge fund manager in theory has the smartest people. They’re very focused, highly incentivized, by and large. You have a brain drain away from the traditional ways to invest toward this area of hedge funds.”

Gabelli also noted that there are many new business graduates today, and the hedge fund industry seems to be benefiting from the pool of new qualified MBA graduates. He said his firm recently hired another 11 new candidates from such pool. He remarked, “That these new graduates very well understand that you have to work as hard either in a mutual fund firm or in a hedge fund establishment.” According to published reports, the GAMCO Investor Inc returned a compounded 19 percent from its inception in 1977 through 2004.

Paul Oranika
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net

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