2012 Hedge Fund Compensation Report

The sense pervading the broader financial sector that 2011 would be a difficult year for compensation appears to have spared the hedge fund industry. Half of this year’s respondents believe that their cash compensation would either stay the same or go up between 1 and 15 percent; only one in five believe it will actually decrease — which is about the same as what we reported last year.

Traders and senior associates saw the most substantial gains in 2011, while COO’s, partners, principals saw no gain or a decrease in total pay. Those differences are mostly from bonuses and are supported by fund performance.

Some of the highlights from this year’s report include:

• The annual average cash compensation for hedge fund professionals is $311,000 USD.
• The average hedge fund employee reported their base pay went up by 8 percent, and expected their bonuses to drop by 4 percent.
• The median legal/compliance officer, making $340,000, was better paid than the median portfolio manager or partner/principal.
• The median trader’s total pay went up 29 percent on the strength of a 50 percent increase in bonus.
• On average, funds that focused on an event-driven strategy had the best-paid employees.
• MBAs surveyed expecting on average 26 percent more than non-MBAs and most of that difference came in the form of bonus payouts.
• In general, the hedge fund job market remains tough but there are pockets of opportunity. One in four of those surveyed say that their funds are hiring for research positions.
• Most hedge fund employees are concerned about job security. Their concerns are mainly related to firm structure and market conditions.

This decrease in fund performance and bonus payout has some professionals worried. Employees surveyed cited market conditions and the pace of redemptions as concerns and the hedge fund job market is supporting those concerns. Forty-four percent of hedge fund employees are happy with their compensation, up from 40 percent in 2010.

The current report with over 40 detailed charts and graphs sells for $397 at HedgeFundCompensationReport.com and is also available to our Premium Members for no additional cost.

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