Hedge Fund Manager Salary
Widely considered the creme de la creme of financial institutions, hedge funds are a source of fascination among investors and others alike. Individuals aspiring to make exorbitant amounts of money look up to top managers with dreams of one day running their own fund. Getting to that point is a topic for another thread - right now it's time to discuss hedge fund compensation.Hedge Fund Manager SalaryThe first thing to understand is that there are two driving factors that stand above all others in determining compensation: fund size and, more importantly, performance.
This applies across the board. Fund size and performance affects both junior and senior employees, although there's less variation in compensation across firms at the junior level.It's simple. The better that fund performs, the greater the returns.
The greater the returns, the greater the bonuses. On the other hand, greater fund size is typically correlated to higher compensation. This is not always the case.It's important to note that, with more assets under management, there are more people to pay and a far greater overhead. Here's, a hedge fund associate, sharing details about smaller funds vs. Bigger funds. LTV - Hedge Fund Associate:To whoever said 500k+ happens only at big funds, you're wrong.Big shops actually don't pay junior guys much at all (unless they're rock stars).
Big funds have huge overhead and way too many people. Paulson, for example, is notorious for underpaying analysts.Smaller shops (run by legit PMs, of course) run lean. For example, a good friend of mine is part of 8 person / 600m AUM shop run by a very good global macro guy. That's 12 bucks in just management fees right there. The guy turned down a very large HF to go to there, and I certainly don't blame him.This is not to say smaller shops are better. Big funds are a great place to start a career because of the exposure to multiple markets/assets/products/strategies you get.
It allows you to find your groove, and then either become successful in that groove at the same fund or move to a smaller fund that specializes in just that. Hedge Fund Compensation - Difference Between Base and BonusHF compensation is different from investment banks in that hedge fund bonuses are much more volatile. In investment banking, it's true that bonuses are determined by performance, but the variation in those bonuses isn't particularly significant.In hedge funds, bonuses are determined by performance. Bonuses can be anywhere from nothing at all to any multiple of the base pay. To make an example, a portfolio manager at a fund with $1bn assets under management would expect a base around $250k with a bonus ranging from $500k to $3 million based on performance.In hedge funds, bonuses are where the real money's at. Hedge Fund Salary out of Undergraduate School?First, getting hired by a hedge fund right out of undergrad is incredibly rare.
They typically want two to three years of experience in their analysts. If you do get hired out of undergrad, there's a ton of variability in compensation depending on performance, culture, the manager, and much more.
Typically, base compensation is anywhere from $60-80k with a 0-100% bonus.Compensation out of undergrad also varies by role within the firm. One user summarized well below. Tonytonitone:The fund I'm at, you're looking at first year salaries of around 60-100K, the higher end being the guys who have bonuses and do the trading and other finance-related activities. 60-75k for tech guys, and about the same range for back office. Hedge Fund Analyst SalaryThe typical hedge fund analyst has two to three years of work experience under their belt - typically in investment banking - which means they get paid a good deal more than a hedge fund analyst right out of undergrad. Here's, a hedge fund vice president, on compensation for hedge fund analysts with around two to three years of work experience.
Hedge Fund Vice President:I won't discuss my compensation directly, but a junior analyst (2 years out of undergrad) can probably safely expect somewhere between $100 - 150k base salary and a discretionary bonus of 0 - 100% of base depending on several factors, usually most important is the fund's / team's performance. A junior guy coming directly out of undergrad (very rare) can probably expect a base salary of $70 - 100k with a discretionary bonus of 0 - 100% of base.
Million Dollar Hedge Fund CompensationThere's always been a lot of fuss in the media about hedge fund salaries north of seven figures. What's the reality?The fact of the matter is that, unless you're a portfolio manager, it's highly unlikely that you'll make seven figures at a hedge fund. Even if you're calling all the right shots, it's unlikely. Don't forget the bottom line of starting a hedge fund: to make money.
If a hedge fund manager can afford to pay you less, they will. More on that from, a hedge fund partner. Bondarb - Hedge Fund Partner:Never underestimate the cheapness of hedge fund managers. I work at a top macro fund and million dollar salaries are very, very rare for analysts even during years when the fund takes in hundreds of millions of dollars.Bottom line is that people start hedge funds to get very rich, and they are going to keep as much as they possibly can without causing massive defections. The bigger the name of the fund, the more they can squeeze the analysts.I have some stories that would curdle your stomach about analysts playing big roles in making huge sums of money for the firm and then either getting an insulting bonus or even getting pre-emptively fired, so they can't state their case for getting their fair share of the cash.It's a very cut-throat world out there. Bottom line is that, to reliably make 7 figures at a hedge fund, you have to manage money, not just funnel ideas to PMs.Analysts generally are considered interchangeable, and portfolio managers who know how to trade and manage risk are far more valuable and much rarer than analysts who can help generate trade ideas.So the question remains: how do you reach the point where you're making that kind of money at a hedge fund?
Here's some succinct insight on how that's done from, a private equity associate. Mrharveyspecter - Private Equity Associate:For PE/ VC/ HFs in general, the path to riches seems to be:. Work at a big shop for a while. Get to a point where you've picked up good experience and where you think you can do better. Go somewhere else where you get more responsibility or strike out on your own.
Profit (or lose)Sounds to me like opportunities for advancement at your firm are limited. If you believe in yourself and your ability to invest, this seems like a good opportunity to test your mettle. Hedge Fund Pay by GeographyThere are hedge funds in New York, Chicago, Greenwich (CT), San Francisco, etc. Does the pay differ by location?
Hedge Fund Manager Salary Highest
The answer is, quite simply, no. In America, geography is a not a determinant of compensation for hedge funds.
Hedge Fund Manager Salaries - Invested into Fund?Investors like to see a hedge fund manager with skin in the game. A manager not invested in the fund is a major red flag.
Hedge Fund
It signals a lack of confidence in the fund. That said, it's not integral that a hedge fund manager have all of their liquidity tied up in the fund. Here's, a hedge fund partner, on the expectations for hedge fund managers. Bondarb - Hedge Fund Partner:As someone who has been involved with seeders that tend to fund smaller startup hedge funds, it is almost a requirement that the managers at small shops be 'all in' with their personal money.If you want to not put all your money in, you need to have a good explanation as to why.like maybe because you need money for a very sick relative but certainly not because, 'I can't make rational decisions with my own money at stake.' That's not exactly the type of person you want managing money for you.People want the manager to be as freaked out about losing their money as he would be his own.so I don't think you'd do very well telling an investor that you won't put your own money in because it won't allow you to be sufficiently reckless. Want Reliable Salary Data for the Hedge Fund Industry?Check out our offering hundreds of user sourced datapoints about salary and bonus in the industry.
Check it out. Looking to Break into the Hedge Fund World?Want to land at an elite hedge fund use our HF Interview Prep Course which includes 814 questions across 165 hedge funds. The WSO Hedge Fund Interview Prep Course has everything you'll ever need to land the most coveted jobs on the buyside. It depends on the fund and your seniority. I think most junior traders, analysts, risk management, etc. Get around 200k+ on average, but once you get closer to the money(portfolio manager) and more responsibility, you will get paid more in line with what profit you generate.
Hedge Fund Pay
It also depends on the size of the fund, assets under management and profitability.I believe in the hedgefund industry, the pay is overly skewed at the top level (say top 20% of the performers), while the average fund does not pay outrageous compensation. With all the recent competition, it's going to be harder for the smaller funds to exploit opportunities for profit.
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It is very very uncommon for someone in their 20's or early 30's to make 5MM in a year at a large hedge fund. Sure, it has happened but it is not common at all. To make 5MM at a hedge fund you generally have to be a PM running a good amount of money and put a good return on it. Depending on the payout your talking about somebody who made like 20% on 250MM or something comparable.very rare for someone in their 20s to have that type of capital.
And I have never heard of an analyst making that type of money. According to Alpha Magazine's 2007 Compensation Report, the median salaries for jr analysts and traders were about 200k while Sr PMs made about 500k. A nytimes article from the same year seems to give the impression that people that work at HFs can make much more.Mr. Hammond started his own hedge fund instead of getting an mba, and (at the time of the article) manages 300mm and makes seven figures at 28. Later the article states that analysts and researchers at funds managing 1-3bln will make 830k.Both of these are a few years old but perhaps they hold some relevance. The key to making millions is to start your own.anything. Though I'm not sure 'hoping' it does well counts as a sound strategy.With respect to hedge funds, just like most of finance, the majority of comp comes in bonus form.
I have a friend, 30 years old, who was a PM at a very large distressed debt shop. His salary was 150k range, but his bonus (2008, the shit) was around $550k. Scale that down on both sides for the analysts. Hell, Lloyd Blankfein only pulls mid-six figures in salary (even before the crash). It's bonus, stock, and that magical 'other' that line the pockets.The same is true of almost every high level executive, at least in public firms. There are very, very few public company CEO's whose actual salary is 1mm+. Thinker481:Smaller shops is where you can make a killing.
Get picked up by a smaller shop and they are typically very generous.atin7 figure salaries are paid more frequently than everyone here is thinking1B fund - will generally have 3-6 analysts and 1-2 fund managers depending on structure - no more than 10-20 people in the entire fund.Off the 1B you are taking in $10mm management fee - this should cover expenses pretty easily. If the fund does well and generates 20% for the year you just pulled in another $40mm to be payed out in bonuses or deferred comp.If you splurge like a rockstar and spend all 10mm from fees you still have $40mm to pay out amongst 10-20 people, with the analysts and managers taking the bulk of it.
Never underestimate the cheapness of hedge fund managers. I work at a top macro fund and million dollar salaries are very very rare for analysts even during years when the fund takes in hundreds of millions of dollars.
Bottom line is that people start hedge funds to get very rich and they are going to keep as much as they possibly can without causing massive defections. The bigger the name of the fund the more they can squeeze the analysts. I have some stories that would curdle your stomach about analysts playing big roles in making huge sums of money for the firm and then either getting an insulting bonus or even getting pre-emptively fired so that they cant state their case for getting their fair share of the cash. It's a very cut-throat World out there.
Bottom line is that to reliably make 7 figures at a hedge fund you have to manage money, not just funnel ideas to PMs.Analysts generally are considered interchangeable and portfolio managers who know how to trade and manage risk are far more valuable and much more rare then analysts who can help generate trade ideas. Bondarb is 1000% correct. Top guys and girls at hedge funds are hesitant to admit it, but they are phenomenally greedy and stingy. The logic probably comes from a scenario where he or she felt short changed at an earlier career stop, so they went out and started their own fund. When it succeeds, they have a money hoarding mentality. It's just mother nature's way of insulating them from the bad scene from earlier when they thought they deserved more than they got.The only way around it is to put lots of money in the top guy's pocket, and then have something in writing which states the relatively paltry sum that will be tossed your way.
Wall street pay, much like life, is not fair at all. So swing for the fences if you ever get the chance.
How Much Does a Hedge Fund Manager Make per Year by State? Hedge Fund Manager SalaryUSCanadaUKAustraliaNew ZealandIndiaSouth AfricaHourly Pay$71.15C$58.93£57.69AU$60NZD$42INR550R331.73Annual Pay$148,000C$122,573£120,000AU$125,073NZD$87,548INR11,41,497R690,000Hedge Fund Manager Salary Influencing FactorsPerformance, experience and the size of the hedge funds primarily drive earnings of hedge fund managers. Companies with larger funds and those that return higher rates to investors generally pay managers more than smaller, less successful ones. Usually, experience significantly spikes compensation for hedge fund managers in the late career stages, as these have demonstrated the knowledge and ability to yield high earnings and value for the funds. LocationPortfolio managers in Sydney make 13 percent more than the national mean of AU$125,073, while pay for those in Brisbane rises four percent above the national average. In Melbourne, portfolio manager pay dips 18 percent below the mean.
Earnings for portfolio managers in Auckland are ten percent more than the New Zealand national average of NZD$87,548. In Wellington, managers get four percent above average.A portfolio manager based in Bangalore fetches an average 23 percent more than the nationwide average of INR11,41,497 in India. Those in Mumbai can expect 17 percent lower pay than the national mean. How Much Does a Hedge Fund Manager Make in the US? Hedge Fund Manager Salary USPer YearPer HourMinimum$70,234$33.77Maximum$607,948$292.28Bonus$9,744 to $489,357$4.68OvertimeN/AN/ATotal Pay$70,234 to $607,948How Much Does a Hedge Fund Manager Make in Canada? Hedge Fund Manager Salary CanadaPer YearPer HourMinimumC$61,000C$29.33MaximumC$205,000C$98.56BonusC$12,947C$6.22OvertimeN/AN/ATotal PayC$61,000 to C$205,000How Much Does a Hedge Fund Manager Make in the UK?
Hedge Fund Manager Salary UKPer YearPer HourMinimum£28,000£13.46Maximum£220,000£105.70Bonus£7,514£3.61OvertimeN/AN/ATotal Pay£28,000 to £215,000How Much Does a Hedge Fund Manager Make in Australia? Hedge Fund Manager Salary AustraliaPer YearPer HourMinimumAU$58,625AU$28.19MaximumAU$165,899AU$79.76Bonus£7,514£3.61OvertimeN/AN/ATotal PayAU$58,295 to AU$182,111How Much Does a Hedge Fund Manager Make in New Zealand? Hedge Fund Manager Salary New ZealandPer YearPer HourMinimumNZD$50,251NZD$24.16MaximumNZD$150,000NZD$72.16BonusUp to NZD$31,808Up to NZD$15.29OvertimeN/AN/ATotal PayNZD$51,692 to NZD$164,449How Much Does a Hedge Fund Manager Make in India? Hedge Fund Manager Salary IndiaPer YearPer HourMinimumINR307,924INR148.04MaximumINR3,034,174INR1,458.73BonusINR8,221 to INR714,900INR3.95 to INR343.70OvertimeN/AN/ATotal PayINR307,924 to INR3,236,683How Much Does a Hedge Fund Manager Make in South Africa? Hedge Fund Manager Salary South AfricaPer YearPer HourMinimumR201,341R96.80MaximumR1,191,952R573.05BonusR150,000R72.16OvertimeN/AN/ATotal PayR201,341 to R1,191,9522.
ExperiencePayScale reports that entry-level earn 32 percent under the national mean of $148,000. Those with five up to 20 years of experience make two percent above the mean. In Australia, entry-level portfolio managers make AU$76,000. This translates to 39 percent below the national average in Australia. Those with five to ten years of experience see earnings of AU$130,000. With ten to 20 years of experience, the pay reaches a mean of AU$152,000. Late-career pay averages AU$161,000.PayScale reports that, with ten to 20 years of experience, make 81 percent more than the national average.
Beginning ones have pay 46 percent below the Indian mean. IndustryCompensation for hedge fund managers ultimately turns on the performance of the funds and the health of the industry. Pay and benefit packages incentivize strategies to maximize the number of investors and the returns to them.A diminishing hedge fund industry could reduce the earnings for managers. According to Forbes magazine, managers and traders ranked in the $10.9 billion in 2016 compared to $12 billion the previous year. This corresponds to an average return, less fees, of 5.6 percent on investments versus 12 percent returns on the Standard and Poor’s 500 stock market index.Mutual fund and other investment companies generally run hedge funds and employ the managers of these funds. Some managers own their own firms.
Nearly 12 percent of hedge fund managers and other “Insurance, Real Estate and Financial Brokerage Managers”, according to Job Bank Canada. Schedule & Working HoursTypically, hedge fund managers log full-time hours. In the United States, nearly 30 percent. Their work schedules consist of traditional weekday, daytime office hours. During these periods, the managers monitor markets, determine what and how much to place in the funds and contact clients. After hours, hedge fund managers may try to return calls or messages and research market, economic or industry conditions.Hedge funds invest in international companies, securities, currencies and other assets. The markets in which managers make transactions operate globally.
Depending on the location, hedge fund managers may take late night shifts to trade on markets in other time zones. Nights and especially weekends may find hedge fund managers meeting with potential clients to increase participants in the funds. Bonuses & BenefitsBonuses and other compensation packages for hedge fund managers rely heavily on performance of the manager and the funds being managed. As a result, profit-sharing, performance bonuses and commissions form major components of a hedge fund manager’s earnings.According to PayScale, profit-sharing accounts for between $5,068 and $345,214 for hedge fund managers in the United States. Reported bonuses start at $9,744 and reach as high as $489,357.
Portfolio managers in Australia earn on average AU$970 from profit sharing and between AU$596 and AU$44,385 in bonuses.In India, portfolio managers claim bonuses ranging from INR8,221 to INR714,900 and earnings from profit-sharing at INR575,000. Commissions average INR120,000.As for health benefits, 69 percent of hedge fund managers in the United States have medical coverage. One out of two enjoys dental coverage, while half receive vision care. In the United Kingdom, eight out of ten hedge fund managers have medical coverage and dental coverage. However, the coverage rate for dental amounts to only 20 percent.In Australia, 12 percent of portfolio managers have medical insurance.
Six percent enjoy dental care, while the coverage rate for vision stands at seven percent. For portfolio managers in New Zealand, the coverage rates for medical, dental and vision are 26 percent, five percent and 11 percent respectively.PayScale reports an 84 percent medical coverage rate for portfolio managers in India, a 16 percent rate for dental and 21 percent for vision care. Hedge fund managers in South Africa have medical benefits at a tune of 22 percent. According to PayScale, no hedge fund managers in the country states having vision or dental benefits. Career OutlookThe U.S.
Bureau of Labor Statistics projects an 11 percent growth in employment of financial analysts, which include hedge fund and other portfolio managers, in the United States through 2026. This means 32,100 more financial analysts.According to Job Bank Canada, the field of “Insurance, Real Estate, and Financial Brokerage Managers,” which includes mutual and hedge fund managers, should have 10,200 job openings for 9,800 hunters for these positions by 2024.Job Outlook Australia reports that the “Financial Investment Advisers and Managers” occupation numbered 51,800 in 2015. That figure should see a rise to 63,200 by 2020, with 25,000 to 50,000 positions being open during that period.The size and strength of the mutual fund industry may shape job opportunities and prospects for aspiring fund managers.
According to a 2016 Deloitte report, the mutual fund market in India represented six to seven percent of the country’s gross national product (GNP). While this suggests room for growth, it also hints at fewer job opportunities in the more immediate time scope. Further, hedge funds face taxes in India of one third of income, while mutual funds and other investments held for a year or more are not taxed.
This treatment also leads to less hedge fund activity in India relative to other investment vehicles. In South Africa, the “Assets Under Management” industry contributes $33 to every $100 of GNP.
ConclusionHedge fund manager salaries on average stay somewhat below the large, news-making earnings of top investors. However, pay still proves healthy and becomes stronger with performance and experience. Opportunities for hedge fund managers to find work improve with experience and the health of the industry and economy where the managers operate and from where they draw investors.