Hedge Fund Compensation Increasing

Survey Finds Compensation Rising at Hedge Funds

Pay has continued to rise at hedge funds for managers and staff, according to a recent survey. Bonuses are increasing, despite 45% of the surveyed hedge funds reporting losses. Another interesting finding is that back office salaries are not improving as much as front office compensation. Those employees in the back office expect little to no increase in pay.

Last year's survey revealed an average salary of $300,000 and this year 28% of funds anticipate increases in overall compensation of at least 15% and 9% of respondents predict that their compensation will double over last year. This increase in pay may be a sign that managers expect their funds to continue this rebound through 2010 or this is simply a reflection of hedge funds keeping compensation competitive with rival financial industries such as private equity or investment banks.

Even in cases where funds did not perform well, hedge fund employees were paid handsomely. Some portfolio manager and trader bonuses in underperforming funds were as high as those working for funds that performed well.

“We expect, if a fund is successful, there is money to be made in down markets and the portfolio managers and traders drive that success,” says David Kochanek, publisher of Job Search Digest. “What investors don’t expect is large bonuses to be paid out when funds do not perform. We saw some of that this year, likely due to multi-year bonus guarantees.”

In some cases, base salaries have moved higher despite short tenure with the firm. In fact, 40% of respondents said they have worked for their current firm for less than two years and 27% said they moved from investment banking. Source

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