CT cements status as ‘hedge fund capital’ despite COVID, as Greenwich Economic Forum returns

In distinction with the fallout from the worldwide monetary disaster of 2008, the U.S. monetary providers sector has not been decimated by the pandemic.

For the reason that starting of the worldwide public well being disaster, hedge funds “on combination … didn’t fall as far and recovered sooner than public markets,” in response to a 2021 report by Preqin, a knowledge and analytics supplier for the monetary providers business. Returns throughout the asset class totaled practically 17 p.c for the previous yr.

“As alternate options to (hedge funds) develop into extra widespread, the lure of the incumbents turns into rather less shiny,” Lawrence J. White, a professor of economics at New York College, stated in a current interview. “However the hedge funds should not going away — that’s for positive.”

In Connecticut and elsewhere, hedge funds have benefited from the continuity offered by their staff’ means to work remotely up to now year-and-a-half. As specialists in “various investments,” hedge funds make investments throughout quite a few classes, together with shares, bonds, currencies, derivatives and actual property.

Among the many states, Connecticut hosts the fifth-largest variety of hedge fund managers, with a complete of 256, in response to Preqin. Solely California, New York, Texas and Florida have extra.

Westport-based Bridgewater Associates ranks because the world’s largest hedge fund by property underneath administration, with a complete of $152 billion, in response to Preqin. Its investor base consists of sovereign wealth funds, public and company pension funds, college endowments, charitable foundations, international governments and central banks.

Ray Dalio, founder and co-chief funding officer of Bridgewater, will converse Tuesday on the Greenwich Financial Discussion board. The Greenwich resident has participated at every version of the GEF since its 2018 launch. The GEF is resuming in-person programming this yr on the Greenwich Delamar resort after it was held in an all-online format final yr due to the pandemic.

“Our imaginative and prescient is to create in Greenwich a Davos-like occasion that has, at its core, finance and various investments — that means the hedge fund, non-public fairness and enterprise capital world,” McGuire stated. “So far as our means to deliver on the planet’s prime buyers, we’re doing very effectively.”

Amongst different initiatives, Bridgewater introduced final month a partnership with financial-technology agency iCapital Community. By way of the alliance, iCapital plans to supply a custom-made expertise platform enabling registered funding advisers and household workplaces to entry Bridgewater’s methods for “ultra-high-net-worth” shoppers within the U.S.

In an unrelated endeavor, iCapital Community introduced in June plans to open workplaces in downtown Greenwich and convey about 200 jobs to the state.

“Creating alternatives forby wealth advisers and their certified shoppers to entry institutional-quality investments has all the time been our core mission at iCapital,” Lawrence Calcano, CEO and chairman of iCapital, stated in an announcement. “We’re excited to associate with such a outstanding crew as Bridgewater to deliver entry to those methods to the wealth administration group.”

A hedge fund hub

About 7,650 employees are employed at Connecticut-based hedge funds, in response to knowledge from Preqin and the Connecticut Hedge Fund Affiliation.

Bridgewater operated with about 1,600 full-time staff as of June 2019, in response to the latest knowledge accessible from the state Division of Financial and Group Improvement. On the identical level, Greenwich-headquartered AQR Capital had about 740 full-time positions, in response to DECD.

The Steven Cohen-founded Point72 employs greater than 1,650 worldwide. Headquartered in Stamford, it has an area workforce of about 550. It ranked as the town’s 14th-largest employer within the second quarter of this yr, in response to Stamford’s Workplace of Financial Improvement.

Whereas the state stays a hedge fund hub, employment in monetary providers continues to be considerably decrease than earlier than the monetary disaster. Monetary actions accounted for about 118,000 positions statewide in August — 19 p.c lower than the sector’s 145,000 employees in the beginning of the 2008-10 recession, in response to the Division of Labor.

Issues that Connecticut may doubtlessly lose extra finance jobs contributed to the choice of then-Gov. Dannel P. Malloy’s administration to approve eight-figure subsidies for Bridgewater and AQR Capital by First 5 Plus. Launched in 2011, this system has offered subsidies to main firms in return for them conserving jobs and hiring in Connecticut.

The state awarded a $17 million mortgage to Bridgewater — with about $8.3 million forgiven and the steadiness additionally eligible for forgiveness. The agency additionally acquired a $5 million grant and will moreover earn as much as $30 million in tax credit.

AQR acquired a $28 million mortgage — all of which is eligible for forgiveness — and a grant of as much as $7 million.

Messages left for Bridgewater and AQR weren’t returned.

Some critics of hedge funds have questioned why companies akin to Bridgewater Associates and AQR Capital wanted to obtain state subsidies provided that their founders are billionaires and since their staff regularly earn compensation effectively above state averages.

Trade backers counter that the taxpayer-funded incentives are justified as a result of Connecticut has confronted competitors in recent times from different states prepared to supply subsidies to influence hedge funds to relocate.

“It’s crucial for Connecticut to have huge companies like AQR and Bridgewater right here to take care of its place as one of many hedge fund capitals of the world,” McGuire stated. “And among the junior folks in a agency graduate and resolve, ‘I need to arrange my very own store.’ To have these folks dwelling and dealing right here is nice for Connecticut.”