From $15m sign-on bonuses to unemployment. The hedge fund lives of late 2026

As has been frequently expressed, it's a bad time for hedge funds. Bloomberg has a chart showing performance by fund for the year to October. It suggests that many funds are already below Ken Griffin's performance hurdle for a viable hedge fund, of the risk free rate plus 4%. Based on the current three month treasury yield, this rate is now over 8%.

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November may be worse again. Funds were already dismissing portfolio managers (PMs) closing pods and returning cash. The market - already saturated with unwanted macro and credit portfolio managers - is now saturated with some more. 

"There will be a big wash," says one experienced portfolio manager and former Goldman MD, referring to a cleaning out of hedge fund talent. "It is not an easy life," he reflects.

Mike Alfaro, CIO of Gallo Partners, a New York-based long short equity fund, says 108 pods have been closed and that he's been bombarded with calls. "Headhunters I've never spoken to before were calling me one after another, asking if we were hiring yesterday. Someone called from Engineer's Gate," he says. "We've received a lot of resumes."

Last month, we reported that 100 people were out of London hedge funds alone in the macro space. Since then, departures have gone parabolic. It's been a sharp, swift turnaround, says Alfaro citing one portfolio manager in his early 40s whose fortunes have suddenly changed. "Earlier this year he was up 14% with a supposedly fully hedged market neutral book and now he is down 9% and has been fired," he says. That same portfolio manager had been receiving offers from major multistrategy funds dangling $15m sign-on bonuses. He'd been holding out for more and for a $6m year-end bonus where he was. Now he's unemployed.

Many of those being let go only recently joined. Anil Gondi, who was running Walleye's equity long short business, only joined in 2025, following a year of gardening leave after departing from Balyasny in June 2024. Engineers Gate reportedly cut its 'stock synthesis team', including Mike Daylamani, who joined in only January 2025. Brevan Howard cut David Heinau, who joined in only December 2025. Heinau previously spent eight happy years as the head of proprietary trading at TD Securities in London. 

What now? Hedge fund jobs have never been sure things. Daylamani at least has been cut before - in 2019 his team was reportedly despatched by Balyasny too. Daylamani bounced back from that, moving first to Schonfeld and then to Engineers Gate, where he ran his strategy based on "a hybrid human plus machine structure that separates idea generation (human) from idea monetization (machine)" and advised analysts to become "research architects" and go "AI native."  He may yet return to say this somewhere else. 

The most pain is being felt at the bottom of the hedge fund hierarchy, among junior traders who only joined funds in the past few months. One told us he's having a "tough time" and that the buyside is being "squashed." - "It was hard enough going from the sellside to a fund but now you have this rate move and the wars and it's too much to handle," he said. 

It's not yet clear how portfolio managers' pain will percolate through to the broader hiring market, or to bonuses for salespeople and traders in banks. Equities desks in banks had been having an exceptional year, with revenues per head up over 30% according to market intelligence provider Tricumen. They will be expecting big bonuses, but if the market is awash with hedge fund talent, the pressure to pay will be less. 

Much depends upon what happens next in the market, says Alfaro. "If there is a V-shaped recovery, you will see a V-shaped recovery in momentum demand," he says. "I do not think there will be a V-shaped recovery," he adds. 

If the recovery does not come, Alfaro predicts there will be a reconsideration of what portfolio management involves. In bond markets, credit PMs have been accused of being "morons" and simply going long bonds. In macro, they've been accused of "just using EGBs as a carry asset. Buying bonds, sitting on the carry and getting a percentage cut." In equities, Alfaro says PMs that sold themselves as market neutral were really just trading market pops. "That’s why so many guys will get fired," he says. "They all do the same thing – they have a thesis but the moment the market moves against them they have no confidence in their investing ability and chase momentum." His own fund is up slightly in November and is "flattish" on the year. There will be more emphasis on finding really good risk-takers, says Alfaro. "There are a few good people out there and that is really going to become known now."

The clear out may create opportunities for a new generation of traders. It may also suppress hiring and pay. "I can't imagine this will be a good year for anyone," says one veteran credit trader. "Hedge funds now have a larger talent pool to choose from, but I'm not sure many will be out hiring."

There could be beneficiaries of the rout. The junior trader who recently moved to a fund says he wishes he'd joined Jane Street or Citadel Securities instead. "I would have been better off there," he reflects. 

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