Hedge funds may cut 20,000 workers worldwide this year, a record 14% of the industry's jobs, as investment losses and client withdrawals erode fees.
Last year 10,000 jobs disappeared at the investment partnerships, according to estimates by Options Group, an executive search firm in New York. Employment peaked at 155,000 in 2007 and has since dropped to about 145,000, the firm said.
About 920 hedge funds, or 12% of the industry, closed last year, according to data compiled by Hedge Fund Research Inc. of Chicago.
Of the 6,800 single-manager funds that remain, 70% lost money in 2008, meaning they cannot resume collecting performance fees until the losses are recouped. Those fees, generally 20% of investment profits, are the primary source of cash used to pay bonuses.
About 6.5% of hedge fund jobs were eliminated last year, when client assets fell 37%, to $1.2 trillion, from their peak in June, according to Hedge Fund Research.