Jain Global, the hedge fund launched by ex-Millennium co-CIO Bobby Jain, launched this month with 42 portfolio managers and 215 staff, despite being an unproven entity. What’s the appeal? Today’s Bloomberg article suggests it’s more than Bobby Jain’s huggable but cerebral personality.
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Jain Global is reportedly paying its people non-deferred all-cash bonuses. It’s also offering said to be offering some portfolio managers a cut of the profits from its centre book. It’s avoided hiring “high profile star traders” and has offered this bounty to people a notch below the most expensive portfolio managers at rival firms. This presumably includes people like Jason Greenberg from Bluecrest and Syril Pathmanathan from DE Shaw.
Jain Global didn’t immediately respond to a request to comment on Bloomberg’s claims, but accounts filed by rival funds in London reveal that deferred bonuses are now common. Citadel’s ‘Employee Incentive Program’ means deferred bonuses are invested in “affiliate managed funds’ for an unspecified period of time. Millennium now defers bonuses in London, even though some of its former portfolio managers tell us it paid all-cash until 2020. Balyasny‘s London operation historically operated a deferred compensation plan whereby deferrals were indexed to an underlying affiliated fund for three years.
Some of the most punitive deferrals are understood to be in operation at Mike Platt’s BlueCrest, where headhunters say bonuses are deferred over three years. If a portfolio manager makes a loss over that period, the deferred bonus is reduced in proportion to the drawdown.
At Jain, there is seemingly none of this: staff are paid for performance annually and the cash is theirs to keep. The fund is reportedly aiming for 10% returns in its first year. As we reported the other day, one banker who’s done the sums thinks senior portfolio managers at Jain will be earning $6.4m each if they return 4%.
Jain’s cash pay could then be supplemented with returns from the centre book. In an article last year, Marc Rubenstein, a former Credit Suisse managing director and portfolio manager at Lansdowne Partners in London, said centre books are a big money earner for the major multistrategy hedge funds.
“The team at the centre… has a God’s-eye view over all the trades made by all the portfolio managers across the entire firm. With additional information about the portfolio managers’ strengths, weaknesses, behavioural tics and so on, they can replicate a subset of those trades in a centre book,” claimed Rubenstein. Individual portfolio managers’ strategies are replicated algorithmically.
This is a source of contention at some other funds. At Jain though, Bloomberg suggests the portfolio managers will get to share in the centre’s gains. At the very least, it suggests a degree of goodwill not on offer elsewhere.
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