Hedge funds aren’t in the mood to hire as investors continue to give the alternative sector the cold shoulder.

Many investors, both institutional and high-net-worth, remain cautious and don’t want to give their money to hedgies, especially with the short-selling ban still in place.

"There are a number of factors which are affecting hedge funds at the moment and the difficulty in finding new investors is one of them. The employment situation is tough across the industry,” says Michael Pretty, director, Metropol Executive.

Anton Murray, director of Anton Murray Consulting, is also downbeat about recruitment. “Most Australian hedge funds are small and have been hit with redemptions, I can’t see much hiring happening until investors return.”

The employment situation is especially tough for smaller funds, with between about five and 10 staff. “For some firms, business has been so bad that they’ve cut back to their principles and are running really lean. When AUM drops to $50m or below, it’s barely enough to cover costs. You have to cut back and only rebuild when confidence picks up,” adds Murray.

But hedgies might in the future welcome back their former employees. Murray explains: “Some funds have asked people to take unpaid leave for a few months and return when things improve. Hedge funds generally prefer to deal with people they already know.”

Large traditional fund managers which also sell alternative products – such as Colonial First State, BT and AMP Capital – are carrying out selective hiring, according to one headhunter who asked not to be named.

Pretty says there is some opportunistic recruitment at a senior level. “But it tends to be a slow and very selective process. It is mainly large international funds that have identified a requirement, whether for a new product or replacement within a team, but have a lack of urgency due to the current market climate.”