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When the fund performs well, employees are paid well – most of the time. The hedge funds reporting this year did well with 54% reported more than 10% return (and 15% reporting over 25% returns) in 2007. The highest average pay by fund performance did not correlate with this, however, as those firms reporting even performance (no return, no loss) had the highest average hedge fund pay. We heard from many respondents that their compensation is disconnected from their individual performance and relied much more on fund or overall firm performance. We find this to be the primary driver of dissatisfaction.
Bigger is not necessarily better. Looking at hedge fund analyst jobs, portfolio managers, and traders, we found that funds in the $500 million to $1 bill range pay the best. We know that small funds struggle to build critical mass from a personnel point of view due to management fees not being high enough to cover a large base salary pool, but as funds increased in size over $1 billion AUM, the average pay actually decreased.
back to 2008 Compensation Report
