Multistrategy hedge funds that paid millions to recruit may now regret it

Multistrategy hedge funds have been a dominant force in financial services recruitment, with headcount rising from 5,100 in 2017 to 24,000 in 2025, according to Goldman Sachs. The question now facing the sector is whether 2026 marks a reversal. Bloomberg reported that Citadel, Millennium, Balyasny and Point72 all lost money at the start of March, as war in the Middle East and policy shifts under the Trump administration disrupted assumptions that had supported years of strong returns. Those funds may have recovered since, but the article notes that conditions are not normal.

During the hiring boom, many funds paid substantial sums to attract talent. Point72 reportedly paid a 31-year-old former Morgan Stanley researcher $50m to join in 2025, and Balyasny was said to have hired people on packages of $30m and $50m last year. Such payments often compensate for bonuses forfeited at prior employers and include guaranteed payments at the hiring fund. A headhunter in the space said the costs are passed through to investors, enabled by pass-through fee structures.

Guarantees can be clawed back in limited circumstances, according to insiders: typically if a portfolio manager leaves for a rival within two years or is found guilty of gross misconduct, such as mismarking a book. If a PM is instead stopped out after losses, the guarantee is retained. A senior multistrategy insider argued this creates an incentive for PMs with losses of $10m to $20m to deepen losses rather than trade back out, saying "You're better off increasing the loss, getting let go and turning up somewhere else." The article notes this concern is not new; Paul Marshall of Marshall Wace criticised excessive sign-on bonuses and pay for second-tier PMs in 2023.

The current environment may amplify these problems. Mark Pacitti, a former Goldman Sachs and Citadel quant who runs Woozle Research, estimates that two-thirds of pods at some funds are down 9% from their previous high-water marks, making recovery difficult. The headhunter predicted "a lot of job cuts coming," with macro pods the most exposed. Even when departing PMs take their guarantees with them, those costs ultimately pass through to investors, increasing pressure on multistrategy firms to generate returns elsewhere.