The great hedge fund exodus from New York, forecast so confidently a few years ago, has quietly reversed. A number of funds that decamped to lower-tax states are reopening or expanding Manhattan offices, drawn back by the city's deep pool of talent.

The fictional fund Cedar Point Capital, which once trumpeted its move south, now keeps a growing New York presence for its investment team. Its partners concede that hiring the analysts and traders they need is far easier in the city than anywhere else.

Taxes and costs remain real disadvantages, and few firms are abandoning their satellite offices. But the reversal underscores a stubborn truth of finance: the money can move anywhere, but the people who make it still cluster in New York.