Hedge funds had been hiring opportunistically from the investment banks as they scooped up finance talent that has been displaced due to the crisis. Now the trend appears to be going in the opposite direction due to trading losses at a number of funds and client redemptions which has decreased assets under management (AUM).

Due to negative performance this year at hedge funds, there is limited hope of incentive fees. Organizational structures are being rethought in light of lower management fee income which has led to layoffs.

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We attach an excerpt from Business Week.

On Oct. 14, two big hedge funds delivered pink slips to dozens of employees. Perry Capital recently laid-off up to 10 employees in the funds’ stock trading group. An even bigger shakeout occurred at Ramius Capital, where 40 staffers were pushed out. The downsizing was first reported by Hedge Fund Alert, an industry newsletter. A spokesman for Perry Capital, commenting on the layoffs says, the fund “sees unprecedented opportunity in the global credit markets that requires fewer equity professionals.’’ A Ramius spokeswoman, without commenting on the layoffs, points out the fund recently made several key hires in its credit trading group.

Pink Slips Fly on Hedge Row - BusinessWeek