The hedge fund industry has faced many challenges since the Great Recession of 2008–09. Many hedge funds were liquidated, and many surviving funds provided anemic financial returns to investors. In recent years, the industry has bounced between strong and weak annual performances. Experts believe the strong financial returns enjoyed by investors in the late 1990s may never be achieved again because of growing demand for greater transparency and institutional quality policies and procedures from potential institutional investors (e.g., endowment funds, pension funds, insurance firms). If the pendulum swings back toward more regulation, it will also become harder to launch and manage a hedge fund. On the other hand, different presidential administrations may choose to reduce regulation of financial sectors, which could fuel growth.
Many small and mid-size hedge funds are struggling to attract new funds from investors. “Almost all the new money flowing into the hedge-fund industry is going to giant multi-strategy investments,” according to “Hedge-fund consolidation to continue in 2023,” an article published by IG Prime. IBISWorld predicts that the majority of firms exiting the industry will have assets of less than $100 million, “and growth will come from new funds by industry leading managers. Other small funds will be forced to consolidate.” Additionally, investors are demanding lower fees and many hedge funds are complying, which is reducing industry profit. Traditionally, management fees hovered around 2.0 percent, and average incentive fees were 20 percent. But in the third quarter of 2025, average management fees were 1.34 percent, according to Hedge Fund Research. The provider of global hedge industry data says that “newly launched funds in 3Q25 charged slightly lower average management fees of 1.18 percent, and incentive fees of 16.29 percent.”
“Inconsistent returns are the key reason hedge fund fees have been falling steadily over the last 10 to 15 years,” according to Forbes. “Other critical reasons include many hedge funds providing long-only or beta-type returns, competition from other investment products with lower fees, and investors becoming more sophisticated and demanding.” In addition, consulting firm Grant Thornton reports that “investors are requesting more nontraditional solutions for managing the risks of their portfolios, such as requesting managed accounts and stand-alone funds.”
Demand will continue for skilled hedge fund professionals. Job opportunities for financial and investment analysts who work for funds, trusts, and related firms are expected to grow by 12.8 percent from 2024 to 2034, according to the U.S. Department of Labor, or much faster than the average for all careers. In addition, the staffing firm Randstad listed the occupation of financial analyst as an in-demand career in its 2026 Salary Guide. It says that “finance professionals with advanced AI or blockchain expertise are in extraordinary demand and can expect compensation packages far above industry averages. This isn’t limited to purely technical roles; the premium applies across a wide spectrum of finance positions, reflecting how deeply these technologies are being integrated into core business functions.”
Required skill sets are changing—especially at quantitative firms, but also at any firm that uses data analytics, advanced artificial intelligence (including machine learning and generative AI), and other technology in its front, back, and/or middle offices. “With hedge funds increasingly using alternative data and algorithms to help unearth investment ideas, and cryptocurrencies continuing to garner interest, computer coding, data science and AI expertise are now in high demand across strategies,” according to Hedgeweek. It also says that “tech-based expertise is now a key battleground in hedge fund staffing, expanding far beyond the computer-based quantitative space in recent years, as managers running traditional fundamental and discretionary-focused strategies also look to draw on the alpha-generating opportunities offered by the avalanche of alternative datasets and algorithm processes in the hunt for yield.”
Spencer Stuart, a global executive search and leadership consulting firm, says that growth in the hedge fund industry has “made the sector a draw for high-profile traders and portfolio managers and, increasingly, for top talent in functions such as sales and marketing, investor relations, legal, operations and technology, finance, risk management, and human resources.” Spencer Stuart believes that a “shortage of top talent could be a greater impediment to growth at successful firms than access to capital.” Hedge funds that recognize this reality and effectively manage current employees and attract top performers for new positions will be best prepared for long-term success in this highly competitive sector. In recent years, there has been a strong focus on employee retention because of high retraining costs, loss of expertise and revenue generation, and other factors when valued employees exit hedge fund firms. In fact, 75 percent of alternative fund managers surveyed by EY in 2022 said that talent retention was their primary talent management goal, followed by hiring, recruiting, and onboarding talent (52 percent), ensuring an inclusive culture (41 percent), and increasing diversity (38 percent). “The ongoing demand on talent has elevated talent management as a major concern for managers and investors alike,” according to “Can resilience shape a shifting landscape?” an article published by EY. “To combat the problem, managers are applying a multipronged approach to improve talent retention by increasing compensation, prioritizing diversity and inclusiveness, and expanding flexibility, job roles and responsibilities.”
Overall, the hedge fund industry continues to compete with the private equity, venture capital, investment banking, and other industries for the most skilled workers. Pensions & Investments reports that “demand for talent has led to millions of dollars in signing bonuses, a higher cut of trading profits and payouts for non-compete periods becoming a norm as the hedge funds tap into a limited pool of eligible candidates.”
Salaries for hedge fund professionals rank among the highest in any industry. GlassDoor.com reports that hedge fund managers earned total compensation that ranged from $253,000 to $433,000 in 2025. According to Institutional Investor, the top 25 hedge fund managers earned an average of $1.2 billion in 2024. Top hedge fund managers earn $4 billion a year. Global markets sales, trading, and research professionals earned average base salaries of $408,500 in 2024, according to the US Global Markets Compensation Survey, from Heidrick & Struggles (a provider of executive search, corporate culture, and leadership consulting services). The most-experienced and highest-skilled hedge fund managers and analysts will continue to enjoy lucrative earnings as hedge fund firms compete for top performers. It’s important to remember that only the most skilled managers at highly successful funds make such lofty incomes. Glocap Search LLC reports that analysts straight out of college with an MBA and little or no prior hedge fund experience earn base salaries of $90,000 to $120,000. Support staff earn much lower salaries. For example, hedge fund accountants with one to three years of experience received salaries that ranged from $62,000 to $115,000 in 2024, according to ZipRecruiter.com. They earned median salaries of $82,623. Hedge fund administrators earned median salaries of $150,800 in 2026, according to ZipRecruiter.com. Salaries ranged from $129,500 to $217,500 or more.