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.

2012 Hedge Fund Compensation Report

We've found a great resource if you're looking for data to help get a raise in the hedge fund industry, to switch funds, or to enter the industry as a new hire. Or if you run a hedge fund, you'll find it useful because it lets you see how much your competitors are paying their employees.

The new 2012 Hedge Fund Compensation Report is out and definitely worth a look.


Here's some key takeaways from 2012:

- Annual average cash compensation for hedge fund professionals is $311,000

- Average hedge fund employee said base pay was up 8% & bonus down 4%

- Parity: Senior associates saw 28% increase in pay, COO's saw steep drop

- Funds that focused on event-driven strategy had the best paid employees

- One in four funds say they're hiring for research positions


The full report is 44 pages long and also includes looks at base package versus bonus, year over year comparisons, average earnings by title, breakdowns of fund size, and more.

If you're wondering their sources, in the past they've pulled data from the likes of Citadel, Lansdowne, Carlson, Peak 6, Morgan Stanley, UBS, Barclays, and tons of smaller funds as well. The report is definitely a comprehensive benchmark for hedge fund compensation practices in the industry.

If you're an analyst, trader, IR professional or COO, the 2012 Hedge Fund Compensation Report is a great tool for comparison and salary negotiation. Click here to check out the report.

Hedge Fund Compensation Report 2011

Those of you looking to enter the hedge fund industry, switch funds, or get a pay raise will find this hedge fund compensation report very helpful. This report gives you a benchmark to help negotiate your pay package based on industry averages.

It breaks down compensation based on size of the fund, employee title, base package versus bonus, and year over year comparisons.

The report is 47 pages, has over 40 charts and is based on data collected directly from big funds (like Citadel, Lansdowne, etc) and small funds as well. You can get the report by clicking here.

Whether you're an analyst, trader, investor relations professional, or CFO, this is a great way to measure your compensation against the industry and a great tool for negotiating so definitely check it out.

Hedge Fund Compensation Report

The pain of 2008 now seems like a distant memory for those working at hedge funds.

As the U.S. economy continues to recover at a slow pace, hedge fund managers are recording double- digit growth and outperforming the markets once again. According to Eureka Hedge, total assets in the industry are now on track to cross the historical high of US $1.95 trillion by end of 2011. The upside is showing in hedge fund pay.

The latest report on Hedge Fund Compensation revealed that hedge fund managers received double-digit increases in total compensation to match the fund's performance, primarily driven by big year-end bonuses. The annual industry report is based on data collected directly from hundreds of hedge fund managers and employees.

In contrast with 2009 compensation, that was essentially flat when compared to the year earlier, 2010 pay came in 10 percent higher. More than half expected a raise in total compensation with the average coming in at USD $326,000 and about one quarter expecting to earn between $300,000 and $500,000. The number of professionals expecting pay cuts decreased from 19 percent last year to 12 percent.

Investors have started asking more questions than in the past and the fund manager's track record is no longer enough to get them to part with their money. They want to know how the strategy is being executed and they want more transparency in the reporting and fee calculations as well.

Despite increased investor demands, hedge fund managers still have a business to run. Some are requiring limited liquidity (a more stable base of capital) and investors are seeing a reduced management fee structure in return. Performance fees, however, are still driving big bonuses.

The front page criticism of Wall Street bonuses has primarily discussed investment banks, but hedge funds are not immune to this criticism. Investors also want to see a bit more skin in the game; 12 percent of hedge fund professionals reported that they are now required to invest a portion of their bonus back into the fund.

The report reveals that the higher the overall earnings, the more bonus matters, especially for those in the highest pay ranges. The top earning hedge fund employees expect a full 80 percent of their cash compensation to come in the form of bonus payments, but these payouts are by no means in the bag. Fewer than one in five hedge fund employees reported having a guaranteed bonus.

(click to enlarge)

The 2011 Hedge Fund Compensation Report has grown to become the most comprehensive benchmark for hedge fund compensation practices in the industry. It is based on compensation data collected directly from fund professionals representing both large and small firms. Click here for the full Hedge Fund Compensation Report.


About the Author

David Kochanek is the publisher of HedgeFundCompensationReport.com and the hedge fund career site, Hedge Fund Jobs Digest, a web-based career service catering to investment professionals.