Multistrategy hedge fund jobs have never been easy, but as interest rates stay high and funds struggle to consistently achieve Ken Griffin’s baseline viable performance of “returns equivalent to the risk free cost of capital, plus 4%,” the difficulty level is rising. Funds are responding in two ways: amplifying the assets under management (AUM) for a small pool of top performers; cutting costs for the rest.
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Shrunken multistrategy hedge fund, Paloma Asset Management is going for the first approach.
Bloomberg reports that Paloma has decided to halve its pods from a peak of 20 to a low of 10 and to henceforth “focus on backing a concentrated portfolio of high-conviction managers in uncorrelated strategies.” Paloma may have had no choice in this matter. – AUM there plummeted from $4bn three years ago to only $1.1bn at the end of 2025. The fund is blaming its quant teams for its travails and will now focus on a dense array of ‘short duration G-7 bond arbitrage, convertible bond arbitrage, relative value credit arbitrage and scientifically engineered futures trading strategies’ instead.
It’s not clear what scientifically engineered trading is exactly, but Paloma is not alone in concluding that a small group of top portfolio managers (PMs) is the way forward.
Dmitry Balyasny, founder of Balyasny Asset Management, said late in 2025 that the average portfolio manager now manages $2bn in gross market value. On this allocation, he or she will currently need to generate $171m in profits per year to reach Griffin’s hurdle rate. Over a one period, Goldman Sachs says the very best PMs do this with a Sharpe ratio of 3.05.
Few PMs can perform this feat. They need a lot of support to do so. Citadel, for example, employs comparatively few people compared to rivals and its average assets under management (AUM) for each of its investment staff are twice as high as elsewhere. As Rupak Ghose points out, this is partly because Citadel is highly cohesive and highly systematised. – Each member of investment staff has Citadel’s large risk team run by Joanna Welsh to back him or her up. Citadel is a finely honed machine rather than a gaggle of loosely tied independent operators.
Building such a machine is expensive. There is another way. Alongside a small group of highly paid top portfolio managers working in-house, Bloomberg says hedge funds are also paying smaller amounts of cash to freelance idea generators. These freelancers are grandly called “buyside alpha” signal generators. JPMorgan suggests they might be paid $10k an idea; some of them have a lot of ideas and are earning $750k.
If you don’t get a top paying portfolio manager job, you can therefore work as a jobbing ideas machine. Business Insider says the ideas are fed into funds’ lucrative center books. Marshall Wace pioneered the approach, but Bloomberg says Balyasny, Millennium, Point72 and others are getting on board. You might not make $50m, but you won’t have to manage $2bn on a high Sharpe, and you’ll get to work wherever you like.
Separately, Goldman Sachs’ M&A bankers are the finest in the world. They are so fine that CEO David Solomon said this week that clients are increasingly bringing them into strategy discussions “earlier and alone without other banks.” But sometimes even Goldman bankers are frozen out.
The Financial Times reports that Goldman has assumed only junior advisory roles in UK deals involving Segro, ITV and Bridgepoint. This is unusual because junior roles usually come with low or zero fees and they look bad for a bank’s reputation.
While Goldman has missed out on the lead role, the FT notes that the likes of Evercore, Moelis & Centerview have become more aggressive. Goldman is still the top M&A advisor in the UK this year, but competition is intensifying. Citi can probably sympathise.
Meanwhile…
Rokos is creating a program focused on compiling sell-side equity research and sifting it for trading opportunities.
Financial advisors at UBS in America have been leaving after the Swiss bank changed its compensation model. It had a “combined team grid” system that let advisers pool their revenues and boost their bonuses. Now it doesn’t. “People got really pissed off.” (FT)
Jump Trading doubled its prediction markets team this year to about 20 people and plans to keep hiring under Simon Johansen. (Bloomberg)
Donald Trump will now sell you privileged access to his Truth Social Tweets before anyone else gets them. (Reuters)
The UK government called private equity bosses to Downing Street and asked them why they’re not listing more IPOs. (FT)
CEOs of AI companies are employing bodyguards because people don’t like AI taking their jobs. They like low key types with a ‘slender profile’. (WSJ)
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