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Finance

Hedge funds are spending fortunes to win the talent war. It's changing the industry in the process.

By Bradley Saacks and Alex Morrell
Updated
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The must-read story in the $5 trillion hedge fund industry used to be about who made the biggest trade or launched the biggest fund. Now it's about who made the biggest hire or got the biggest guaranteed payout.

As the increasingly institutional space has veered away from star funds run by a single genius to sprawling investment platforms with dozens of investing teams, the industry has grappled with a shortage of talent.

It's now such a finite resource that top portfolio managers are commanding deals that resemble those of professional athletes, and top managers accustomed to poaching their choice of talent by paying top dollar are now developing more talent in-house to cut expenses.

Business Insider has closely covered the evolution of hedge funds. See our stories below on the state of play, how the industry is changing, and who the new stars are.

The state of play

The numbers are staggering, with guaranteed nine-figure payouts and years-long non-compete clauses, but the anecdotes of what it's like inside the biggest funds are just as startling.

Firms dangle the prospect of relocating to tax havens like Puerto Rico and Dubai to entice top traders. Recruiters are being pushed into ethical gray areas to determine the truth about potential hires. While white-collar career ladders are collapsing in other industries, hedge funds are accutally building them.

How it's changing the industry

Whenever this much money is flowing, there's bound to be ripple effects. Within hedge funds, this means the introduction of both new industry players and new roles within the largest firms.

As with any gold rush, people are picking up an ax in the hopes of carving out a little piece for themselves. It's up to the powers-that-be of the industry to decide what's real and what's fool's gold.

The competition for the top PM talent scouts

One subset of the industry that has been thrust into the spotlight during the talent shortage is the group of individuals who find top PMs.

Recruiters and business development professionals at the industry's biggest managers have seen their own worth soar in recent years. With a steady flow of fresh capital into hedge funds, this cohort is likely to remain in demand for years to come.

Bradley Saacks
Bradley Saacks
Bradley Saacks covers hedge funds and other asset managers for Business Insider from New York. He first wrote about the multi-trillion-dollar industry for Business Insider from New York in late 2018, after spending two years covering mutual funds for the Financial Times' trade publication, Ignites.He left Business Insider for a little over a year, starting in mid-2022, and worked as a business reporter for Semafor, a media startup. He rejoined Business Insider in 2023, this time in the publication's London office, and has since relocated back to New York. A graduate of the University of North Carolina at Chapel Hill's School of Media and Journalism, he was the recipient of the O.J. Skipper Coffin Award, which is given to the top graduating senior in the reporting track.During his time at Business Insider, he has broken news on the biggest names in hedge funds, including Paul Singer's Elliott Management, Ken Griffin's Citadel, Seth Klarman's Baupost Group, and more. He is interested in telling stories about the people behind the scenes who are driving big changes at the biggest firms. He can be reached on WhatsApp and Signal at +1 919 816 5537.Notable stories include:
Photo of Alex Morrell
Alex Morrell
Alex Morrell was a senior correspondent at Business Insider covering Wall Street at large.Prior to Insider he was a staff reporter at Forbes Magazine covering billionaires and their businesses. He's previously written and worked for the Associated Press, the Green Bay Press-Gazette, the Milwaukee Journal Sentinel, and the Wisconsin Center for Investigative Journalism. He's a graduate of the University of Wisconsin and holds a master's in business and economic journalism from Columbia University. Selected recent stories:How our insatiable appetite for electricity is giving rise to traders who make money from power-grid bottlenecksBehind a Wall Street headhunter's rapid ascent lie accusations of harassment and abuseSchonfeld's growing pains: Ryan Tolkin reckons with his greatest challenge yet as returns dry up at the $13 billion hedge fundHow a California hedge fund bulldozed the state's labor laws to impose some of the harshest noncompetes on Wall StreetFear and loathing on Wall Street: Inside the paranoid, hyper-competitive onslaught to prevent quant traders from defecting to rivalsMillennium has quietly minted billions off of America's passive-investing craze. Now rivals are racing to catch up.The bubble has popped on the mighty index-rebalance trade, and the overcrowded strategy is wreaking carnage across hedge fundsInside the rapid rise and fall of Coatue's quant fund: How a 23-year-old Wharton wunderkind seized power, alienated employees, and blew a $350 million opportunityFor years, Chase and Citi credit cards offered a generous, under-the-radar benefit that protected customers. And then the bots arrived.
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