Key Takeaways From the 2013 Hedge Fund Compensation Report ~ market folly

Tuesday, February 12, 2013

Key Takeaways From the 2013 Hedge Fund Compensation Report

The 2013 Hedge Fund Compensation Report has been released we wanted to highlight some of the key observations, including: a double-digit increase in total cash pay in 2012, up from 2011.  You can click here to see the report.

It's based on data collected directly from hundreds of hedge fund professionals (Citadel, Silver Point, Lansdowne, Carlson, Man, Black River just to name a few).  The 53-page report highlights:

- Breakdown of earnings by title, fund size, and fund performance
- Cash compensation earned
- Bonuses
- Equity sharing levels
- Work satisfaction
- Relationship between fund performance and pay expectations

Key Takeaways From the 2013 Report

- Annual average cash compensation is $314,000, up 15% year over year

- Nearly three-quarters of participants work between 50-70 hours per week

- Mean compensation did not vary much based on fund size

- Big funds are getting bigger while small funds have trouble raising capital

- Only 4% of respondents made more than $1 million (correlated to good fund performance)

- Bonuses represented more than 70% of total earnings for the 2 highest earning groups

- 13% of respondents said they were required to invest some of bonus back into fund

As far as hedge fund hiring goes, 2012 saw an increase in those hiring operations positions.  In 2013, many funds expect to hire in their legal department.  As many funds were in the black in 2012 (and are off to a good start in 2013), it's reasonable to expect investment team hiring to pick up as well.

Overall, some very interesting data highlighted in the report.  If you're looking to get into the industry or make a move, this report could definitely provide leverage in negotiations.  And if you run a fund, these data points will shed light on if you're under/over-paying employees and what the competition is offering.  You can check out the full hedge fund compensation report here.

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