Millennium’s founder, Izzy Englander, called hedge funds’ talent shortage a bubble. Citadel’s Ken Griffin described portfolio managers and the like as a “scarce resource” within a “profitable value chain,” noting that compensation would increase in such a situation because “that’s where the money flows,” in a 2025 talk.
But for billionaire Elliott founder Paul Singer, the talent war in the $5.3 trillion hedge fund industry is “exaggerated” for several reasons, including the lack of a recent bear market and increased fees.
In a letter sent to investors in late January, Singer said the evidence backing up the existence of the talent war is “puzzling.”
The eye-popping compensation packages given out to top PMs and yearslong non-compete contracts are “mostly a function of the non-stop bull market, the extraordinary impact of the bull market on fees,” and a “paucity of serious downturns in asset prices,” Singer wrote, according to the letter seen by Business Insider.
These factors, Singer wrote, can “create the perception of a permanent change in the compensation of talented managers, but we think the jury is out on the sustainability of these conditions.”
“The next serious bear market could lead to a comprehensive rethink of how investors determine excellence,” he added.
Elliott declined to comment.
The talent war has mostly been driven by the growth of multistrategy managers like Millennium and Citadel, which manage $86.7 billion and $69 billion, respectively, and spread that money across various investment teams and diverse strategies to deliver consistent returns. They represent a subsector of the industry that has hoovered up assets and people for years, hitting a fever pitch after 2022, when global equities tanked while this flavor of hedge fund surged.
Many of these funds charge a pass-through fee, which passes the expenses for employee recruitment and retention onto the end investor. This structure has rankled some fund backers, especially when net returns are meager. The dramatic escalation in investing talent compensation has fundamentally changed the industry, from new launches to internal culture to training programs.
Elliott, which runs just under $80 billion, according to its website, invests in many different strategies, but is structured differently than sprawling investment platforms run by the likes of Millennium and may not feel the same day-to-day stress about employee compensation. For example, while the manager’s overall head count has grown in recent years, it is still less than a fifth of Citadel’s, according to regulatory filings.
But that doesn’t mean the firm hasn’t dealt with its own personnel churn, as the industry atmosphere has changed. As Business Insider reported, following a Bain-developed restructuring plan, the long-running fund has lost seasoned executives and traders as it has become more institutional.
And some rivals have even been able to poach from the firm in recent times, most notably Citadel’s hire of London-based partner Nabeel Bhanji at the end of 2024.
