Hiring growth at major multistrategy hedge funds has slowed as firms increasingly allocate capital to external portfolio managers through separately managed accounts (SMAs), easing competition for investment talent, according to a report by Business Insider citing research from Goldman Sachs.

Headcount at multistrategy and multi-manager hedge funds increased 7% between mid-2025 and mid-2026, down from annual growth rates of 10% in 2025, 18% in 2024 and 27% in 2023.

Goldman attributed the slowdown partly to the expansion of external allocation programmes, which allow hedge funds to deploy capital with independent managers rather than recruit additional in-house investment teams.

Firms including Millennium, Schonfeld and Qube have expanded their use of SMAs, while Citadel has also begun exploring external allocations. The structures allow portfolio managers to launch independent firms with institutional capital while providing allocating platforms with greater transparency and control over investments.

External assets under management at multistrategy firms rose from $34bn to $47bn over the past 12 months, according to Goldman, with the increase equivalent to approximately 800 full-time employees. Including that external capacity would have lifted effective annual headcount growth above 10%, broadly in line with the previous year.

Average external allocation sizes have also increased 19% year-on-year to nearly $190m, reflecting growing demand from large platforms for managers capable of deploying substantial capital.

The shift comes after several years of intense competition for portfolio managers, during which multistrategy firms offered guaranteed compensation packages worth tens of millions of dollars to attract investment talent.

Goldman's research also highlighted a change in recruitment priorities, with investment professionals accounting for 43% of hiring in 2026, up from 40% in 2024, as firms reduced recruitment for non-investment roles.

The findings suggest that the expansion of external allocation programmes is beginning to ease hiring pressures across the multistrategy sector, although competition for established portfolio managers remains significant.