The war isn’t over, but it may have peaked.
Hedge funds have been fighting one another for years for top traders. The surge of assets into the industry, in particular into the people-heavy multi-strategy platforms, has given firms essentially a blank check to bring in top PMs. It’s driven compensation figures through the roof, with funds guaranteeing tens of millions of dollars to investing talent before they’ve made a single trade.
But new research from Goldman Sachs found that hiring among these multi-strategy and multi-manager funds has slowed, relative to the amount of assets they’ve brought in over the past 12 months. These firms grew head count 7% from mid-2025 to mid-2026, a step down from when these funds’ employee totals jumped 10%, 18%, and 27% in 2025, 2024, and 2023, respectively.
One reason for the slowdown: Separately managed accounts.
“This slowdown is likely a byproduct of the continued build-out of external allocation programs, which effectively substitutes third-party capital deployment for internal hiring,” the report reads.
Funds, including Millennium, Schonfeld, and Qube, have been aggressive in putting their capital to work in funds operating outside their four walls, almost always via an SMA, which provides more transparency and flexibility than typical. Even firms that have traditionally not pursued external allocation opportunities, like Citadel, have begun to dip their toes into the space.
The structure has given talented portfolio managers looking to start their own venture a straightforward path to running their own firm without spending months fundraising from slow-moving institutions like pensions and sovereign wealth funds. Often, the founders of firms accepting SMA investments from large platforms were once traders at prominent multi-strategy managers.
The growth of SMAs over the past 12 months is equivalent to roughly 800 full-time employees, according to Goldman. If funds had instead hired 800 employees, the year-over-year growth would have been more than 10%, roughly the same as the year prior.
SMAs have been one of the biggest trends in the industry, and funds running capital from these large firms now control a sizable chunk of money. Goldman’s report states external assets under management went from $34 billion to $47 billion over the past 12 months.
For funds that have most of their investment talent in-house, such as Millennium and Schonfeld, the right external allocation is often one that can handle a large investment. The average ticket size, Goldman writes, is nearly $190 million, up 19% from the year prior.
It’s still early, but the thesis that SMA growth could help cool a white-hot market for talent has so far played out. Goldman’s report also notes that firms have pulled back on non-investment hiring, with 43% of roles going to investment personnel in 2026, up from 40% in 2024.
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“A reversal, even a modest one, is a meaningful development,” Goldman wrote.
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