Goldman Sachs data points to easing hedge fund hiring race as SMA allocations grow

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Hedge fund hiring slows as SMA allocations grow

Highlights

Multi-strategy and multi-manager hedge fund headcount grew 7% from mid-2025 to mid-2026, below prior increases of 10% in 2025, 18% in 2024, and 27% in 2023, as external allocation programs expanded.
Separately managed account (SMA) assets rose from $34 billion to $47 billion in the past 12 months, with SMA growth equivalent to around 800 full-time hires and average mandate ticket size up 19% to nearly $190 million.
Investment roles will represent 43% of 2026 hedge fund hires versus 40% in 2024, as firms prioritize revenue-generating talent despite slower overall hiring growth.

Hiring growth slows as external mandates expand

As reported by Business Insider, citing Goldman Sachs, multi-strategy and multi-manager hedge funds increased headcount by 7% from mid-2025 to mid-2026, below the pace seen in earlier periods when employee totals rose 10% in 2025, 18% in 2024 and 27% in 2023.

The bank says the moderation reflects the continued build-out of external allocation programs, which let firms deploy capital through third parties instead of adding staff internally. That shift is emerging after years in which strong asset inflows, especially into people-intensive multi-strategy platforms, helped drive compensation guarantees for portfolio managers into the tens of millions of dollars.

Funds including Millennium, Schonfeld and Qube are aggressively allocating capital to managers outside their organizations, typically through separately managed accounts, or SMAs. Goldman says even Citadel, which has not traditionally focused on outside allocations, is beginning to enter the space.

The structure also creates a clearer route for portfolio managers who want to launch their own firms, allowing them to run money without a long fundraising process from institutions such as pensions and sovereign wealth funds. In many cases, the founders taking SMA capital previously worked at large multi-strategy hedge funds.

SMA growth reshapes talent demand across the sector

Goldman estimates SMA growth over the past 12 months is equivalent to roughly 800 full-time employees. If firms had added that capacity through direct hiring instead, year-over-year headcount growth would have topped 10%, broadly in line with the prior year.

External assets under management in these programs rose to $47 billion from $34 billion over the same period, according to the report. For firms that still keep most investment talent in-house, such as Millennium and Schonfeld, Goldman says the preferred outside allocation often involves managers able to absorb sizable mandates, with the average ticket reaching nearly $190 million, up 19% from a year earlier.

The report also indicates firms are becoming more selective in support hiring. Investment personnel account for 43% of roles in 2026, up from 40% in 2024, a sign that hiring budgets remain focused on revenue-generating positions even as the broader talent war shows signs of peaking.

In our earlier article on EQT’s acquisition of U.S. real estate firm Stockbridge, we outlined how private capital managers are expanding platforms through M&A as fundraising tightens and exits remain sluggish. We also noted how EQT has been broadening its footprint via major deals, adding scale and diversification to compete more effectively in a tougher market environment.

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