SAN DIEGO, Dec. 3, 2008. /PRNewswire/ — A survey conducted by Job Search Digest, publishers of Hedge Fund Jobs Digest, today revealed a shift in the hedge fund industry. Given the current state of the market, the results tell an interesting story and show that industry players knew trouble was on the horizon earlier this year.
Despite no significant increase in compensation, there was a substantial increase in satisfaction with hedge fund compensation. This indicates that, well before Wall Street’s meltdown, employees knew the market had shifted. This year’s report reveals that 42 percent of employees are happy with their current level of compensation — up from a mere 25 percent last year.
The average total cash compensation grew four percent over last year to $260,000 USD. Although primarily a North American based report, over 10 percent of respondents were from the UK, where average compensation actually decreased as compared to last year.
“People are attracted to hedge fund careers because of a huge potential upside,” says David Kochanek, publisher, Job Search Digest, which produces Hedge Fund Jobs Digest, a research service focused on hedge fund jobs. “Last year, we found that dissatisfaction with compensation was primarily driven by the desire for greater upside. Now, with all the nervousness in the market, many employees feel lucky simply to still be working in the industry.”
Things have shifted and movement in the industry is now driven by the firm versus the individual. “While last year, we were recommending firms provide healthier compensation packages and move quickly to attract talent, this year the talent opportunity is in picking up top performers displaced from other firms or investment banking jobs,” says Kochanek.
When the fund performs well, employees are paid well — most of the time. The firms reporting this year performed well with the majority reporting more than 10 percent return (and many reporting over 25 percent return). Pay levels did not correlate with fund performance, as those firms reporting flat performance (that is, zero return) had the highest average pay.
The report reveals large ranges of earnings, as well as a large variance in bonuses, which can vary significantly depending upon responsibilities, experience and location. Kochanek states that there are typically three primary drivers in the compensation formula: experience, performance of the fund, and size of the fund. Regarding fund size, bigger is not necessarily better. Although the hedge fund industry is often referred to as a meritocracy, many respondents to the survey indicated their bonus is disconnected from their individual performance and, instead, based on overall firm performance.
The report also reveals that funds in the $500 million to $1 billion range pay the best. “Small funds often struggle to build a team of critical mass due to management fees that are not sufficient to cover a large base salary pool. However, we found that as funds increased in size to over $1 billion assets under management, average pay actually decreased,” said Kochanek.
The Hedge Fund Jobs Digest Compensation Report is based on compensation data collected directly from hundreds of Portfolio Managers and employees from firms, both large and small, such as Bank of New York Mellon, Barclays Global Investors, Citigroup, Fountain Advisors LLC, HSBC, Kellogg Capital Group, Lansdowne Partners and many others.
The report can be found on the Job Search Digest website on the hedge fund compensation page.
About Job Search Digest
Since 2002, Job Search Digest has provided web-based career services, catering to professionals in the private equity, venture capital, investment banking and hedge fund industries worldwide. Hedge Fund Jobs Digest is a research service that maintains a database of hedge fund jobs worldwide.
Job Search Digest
CONTACT: David Kochanek, Publisher