The revival of the hedge fund industry after its trouncing in 2008 plus regulatory reforms are dictating hiring trends in the asset class for 2010 and beyond, according to a new report.

Most in demand are those managers who bring to the table established relationships with institutional managers “who can bring in the assets,” said Chad Astmann, the co-author of the new report on hedge fund hiring published by Heidrick & Struggles.

Earlier this year, things picked up on the hedge fund hiring front, but now “there has been a reduction in truly viable destinations for hedge fund talent,” Astmann said in a statement.

Although both very senior level and junior level employees are having luck being hired, mid-level candidates are losing out, unless they have a specific sector focus, the report said.

The big unknown in hedge fund employment is the impact of the Volcker rule which was enacted as part of the Dodd-Frank financial reform bill. That rule restricts bank proprietary trading activities, as well as the size of the stakes banks can take in hedge fund firms.

There is disagreement, however, on where talent will flow in the post-Volcker rule world.

One camp favors sticking with independent hedge funds in the belief that even as the asset class is regulated, the larger firms will be attractive to institutional clients.

Another view is that banks have already laid their plans for how to deal with the Volcker rule and opportunities may still lie in bank-owned or funded alternatives firms.

Whatever the eventual fallout from financial reform, Astmann said, he expects to see top talent seeking out high-quality, stable firms.

“Firms below the $500 million mark and with capital-raising difficulties are somewhat limited given the uncertainties in the market,” he said.

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