Funds management facing 'significant' staff reductions in 2009

The funds management sector is facing a significant reduction ofinvestment personnel this year, according to van Eyk head of investment research Nigel Douglas.

“We expect there to be significant staff reductions during the course of 2009, although these will vary across the sector,” he said.

Cutbacks had been limited last year by fund managers’ “desire to keep their quality teams together”, but Douglas suggested this could change in 2009.

Some managers would “use the buffer created by a very big year last year in the equities sector to trim their teams pre-emptively this year,” he said.

However, any bear market rally during the year would provide relief to the markets, thus slowing cutbacks, as would any money coming out of cash that is directed into equities, Douglas said.

He also expects that the cutbacks in the funds management sector would probably be proportionally less in Australia than globally during the year.

“Funds management is a relatively concentrated industry in Australia, with a lot of funds and boutiques still here, so I don’t think the reductions are going to be in a straight line.”

Douglas also foresees “some unwinding of people chasing higher compensation packages and moving to set up boutiques, as occurred during the bull market”.

“We may thus even get stability of (investment) teams because people can’t move anywhere in the current market,” he said.