Multistrategy hedge funds that paid millions to recruit may now regret it
If the past few years have been defined by anything in financial services recruitment, it's the rise of jobs at multistrategy hedge funds. Between 2017 and 2025, Goldman Sachs says headcount at multistrategy firms went from 5,100 to 24,000 people. Could 2026 be the year that this goes into reverse?
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As war in the Middle East and the vagaries Trump's tweets upend previous assumptions, funds that spent years delivering strong returns have lost money. Bloomberg reported that Citadel, Millennium, Balyasny and Point72 all lost money at the start of this month, for example. They may since have recovered from those losses, but these are not normal times.
It's unfortunate, then, that when times were normal, most major funds added staff and often paid handsomely in the process. Point72, for example, reportedly paid a 31 year-old ex-Morgan Stanley researcher $50m to join in 2025. Balyasny was said to hire people on $30m and $50m last year.
Such payments often include money to compensate for bonuses left on the table at previous employers, plus guaranteed payments at the fund that's hiring. Multistrategy hedge funds can afford to pay these sums of money because they charge investors pass through fees. "All guarantees and compensation are passed through," says one headhunter in the space.
Guarantees can be clawed back from the portfolio managers receiving them. But insiders say these clawbacks typically apply only in particular circumstances. - If you leave for a rival firm within two years, the guarantee must usually be repaid. If you're found to be engaged in gross misconduct (eg. mismarking your book), the guarantee must also be repaid. But if you lose money and are "stopped out" (forced to leave), the money in the guarantee is yours to keep.
One senior insider from a multistrat suggests that this means that portfolio managers who have lost some money but not enough money to be stopped out, are almost incentivised to lose a bit more.
"If you haven't been stopped out yet, but you're facing a $10m-$20m loss, it's going to be very hard to trade your way back out again," he says. "You're better off increasing the loss, getting let go and turning up somewhere else."
This isn't the first time that this observation has been made. Paul Marshall of hedge fund Marshall Wace complained in 2023 that some funds were not only paying "very silly sign-on bonuses," but that the recipients were being fired and moving on to other funds. Even second tier portfolio managers were being paid like "Cristiano Ronaldo," said Marshall at the time.
It can be difficult for multistrategy funds to assess who's worth their multimillion guarantees and who isn't. "You can get people who've been very successful at other funds, or in banks, and then they make a loss," says the insider. In this kind of year, the number of portfolio managers with losses may be substantially higher. Mark Pacitti, a former Goldman Sachs and Citadel quant who runs research firm Woozle Research, estimates that two thirds of pods at some funds are down 9% on their previous high water marks. Trading their way out of that could be hard.
"There are a lot of job cuts coming," says the hedge fund headhunter. Macro pods are worst off. Even when portfolio managers leave, though, their guarantee money will go with them. The cost of those guarantees will be passed through to investors, and this will only increase the pressure for multistrats to make the money back elsewhere.
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