Hedge fund growth is fueling a striking increase in the number of investment jobs in Connecticut, state officials report.
The number of jobs in Connecticut, long a magnet for the investment industry because of its proximity to New York’s financial markets, tripled between 1990 and this year, according to a recent state labor report.
Investment jobs are few, totaling 21,000 in January, compared with 7,000 in 1990, according to the Connecticut Economic Digest, published by the Department of Labor and Department of Economic and Community Development. Employment in Connecticut totaled 1.69 million in January, the most recent month for which statistics are available.
Some of the new jobs came when financial services firm UBS moved to Stamford in the late 1990s. But nearly half the total jobs — about 10,000 — are in hedge funds and private equity firms.
And since 2001, 80 percent of the job gain has been in hedge funds and equity firms, said Lincoln Dyer, a state labor economist who wrote the report.
“Hedge funds are driving that growth,” he said.
Connecticut’s securities employment growth has also outpaced nationwide growth in the industry, which has seen a decline since 2001, the report said.
More Scrutiny
The $1 trillion hedge fund industry, which takes on large risks for big rewards, has been drawing increased scrutiny as it seeks a broader class of investors such as pension funds and university endowments.
Hedge funds can invest in anything from commodities to real estate. Some hedge funds buy entire companies; others act like day traders and buy and sell stocks, but with billions of dollars at stake.
There are more than 9,000 hedge funds in the U.S. They traditionally have catered to the rich, but increasingly are luring less wealthy investors.
Addison A. Armstrong, manager of exchange traded markets at TFS Energy, an energy and energy-related brokerage firm in Stamford, said the attraction of Connecticut for financial firms is obvious.
“What generally happens is that Wall Streeters grow up. They have families, they have children,” he said. “They’ve grown up elsewhere and are not necessarily equipped to live in Manhattan. Southern Connecticut looks good.”
Jonathan Lux, who handles business development at Zebra Capital Management in Milford, said hedge fund growth feeds on itself. Funds that invest in hedge funds are locating in lower Fairfield County to be close to similar businesses, he said.
“There’s such a proliferation in this industry,” he said.
Karan Sampson, director of hedge funds at Greenwich Associates in Greenwich, said the industry saw an increase in jobs immediately after the terrorist attacks of Sept. 11, 2001, as New Yorkers moved to Fairfield County.
“When it came time to open their own businesses, they did it where they lived, not in New York City,” she said.
David Saunders, managing director of K2 Advisors, a fund of hedge funds, said the firm quit New York for Stamford about four years ago in search of a backup office for disaster recovery following the Sept. 11 attacks, efficient public transportation and lower taxes.
“We’re part of that wave that came up here,” he said.
Among the job growth statistics in the investment industry in Connecticut is the eye-popping average annual salary of $310,734 in 2005.
