Hedge fund hiring cools as external capital models reshape talent race

Goldman Sachs research indicates that the industry's reliance on separately managed accounts (SMAs) is acting as a substitute for internal hiring. Firms including Millennium, Schonfeld, and Qube have pivoted toward deploying capital through these structures, which offer transparency and efficiency. Even industry giants like Citadel are beginning to explore this path, which allows portfolio managers to launch independent ventures without the grueling process of institutional fundraising.

This shift carries significant weight for market dynamics. Goldman estimates the growth of SMAs over the past year is equivalent to roughly 800 full-time roles. Had these platforms opted for traditional hiring instead, year-over-year growth would have mirrored the double-digit surges seen in 2023 and 2024. Furthermore, external assets under management within these programs climbed to $47 billion, up from $34 billion a year prior. As the average ticket size for these allocations reaches $190 million, the talent war is cooling, with firms now prioritizing investment personnel over administrative staff. While the competition remains intense, the rise of the SMA model provides a structural brake on the skyrocketing compensation packages that defined the previous cycle.