Hedge funds are spending fortunes to win the talent war. It's changing the industry in the process.

The must-read story in the $5 trillion hedge fund industry used to be about who made the biggest trade or launched the biggest fund. Now it's about who made the biggest hire or got the biggest guaranteed payout.

As the increasingly institutional space has veered away from star funds run by a single genius to sprawling investment platforms with dozens of investing teams, the industry has grappled with a shortage of talent.

It's now such a finite resource that top portfolio managers are commanding deals that resemble those of professional athletes, and top managers accustomed to poaching their choice of talent by paying top dollar are now developing more talent in-house to cut expenses.

Business Insider has closely covered the evolution of hedge funds. See our stories below on the state of play, how the industry is changing, and who the new stars are as a result.

The state of play

The numbers are staggering, with guaranteed nine-figure payouts and yearslong non-compete clauses, but the anecdotes of what it's like inside the biggest funds are just as startling.

Big-name funds churn through underperformers, giving PMs "moment-by-moment paranoia," according to one former investor. Firms dangle potential relocation to tax havens like Puerto Rico and Dubai to entice top traders. Recruiters are being pushed into ethical gray areas to determine the truth about potential hires.

How it's changing the industry

Whenever this much money is flowing, there's bound to be ripple effects. Within hedge funds, this means the introduction of both new industry players and new roles within the largest firms.

As with any gold rush, people are picking up an ax in the hopes of carving out a little piece for themselves. It's up to the powers-that-be of the industry to decide what's real and what's fool's gold.

The competition for the top PM talent scouts

One subset of the industry that has been thrust into the spotlight during the talent is the individuals who find top PMs.

Recruiters and business development professionals at the industry's biggest managers have seen their own worth soar in recent years. With a steady flow of fresh capital into hedge funds, this cohort is likely to remain in demand for years to come.