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Early indications that fund managers were merrily hiring are being replaced by intimations that they’re merrily firing – although not quite as merrily as investment banks.

Fidelity has cut staff. So have Aberdeen Asset Management, Credit Suisse and – so we hear – UBS. And the head of HR at the asset management arm of one US bank says there’s not much hiring going on at all.

What went wrong? It’s partly down to monumental fund outflows (we’re talking a 12.5% exodus of European funds in the first quarter of this year) and poorly performing equity markets. It’s also because fund management staff eat up a lot of fund management revenues.

“Staff costs in fund management are anything from 60-80% of total costs,” says Amin Rajan of Create-Research. He adds: “Most of those costs are fixed – only around 20% is bonus, so they have a lot less flexibility than investment banks.”

Cuts so far have been minimal, however. “Some buy-side firms are taking advantage of current conditions to let go of bottom-quartile performers and staff in now non-strategic business areas, but cuts have been a lot less than we've seen in investment banks,” says Amanda Foster at headhunter Russell Reynolds.

“People are being let go, but it’s mostly in the back and middle office,” says Martin Lorrigan at headhunter Principal Search.

Rajan predicts there will be more cuts to come unless markets pick up significantly in the next quarter. Back and middle office staff are likely to remain first in line for the chop. “Fund managers are very loathe to cut people in the front office. It doesn’t look good to investors or consultants,” says Rajan.