U.S. Hedge Fund Compensation
Report: Compensation for US Hedge Funds Could Fall 10%
Overall US hedge fund compensation may fall by an average of 10% this year compared to 2010, according to a report Glocap Search LLC and Hedge Fund Research Inc. The decline would come in response to this year's poor performance by the industry in a tumultuous market with high volatility like we've seen the last few months especially. Portfolio managers are expected to see the biggest cut in compensation, by as much as 30%.
Portfolio managers' pay, which is most closely tied to performance, should see the biggest decline, slumping about 30 percent on average, according to Adam Zoia, chief executive officer of Glocap, a New York-based recruiting firm. Hedge funds have lost 5.4 percent on average this year, according to data compiled by Bloomberg, as the European debt crisis worsened and the U.S. economy threatened to slip back into recession.
"This has been a tough year," Zoia said in a telephone interview. "People therefore have lowered year-end expectations and those expectations will be met."
Compensation rose in 2010, when hedge funds gained 8.2 percent on average, and in 2009, when they climbed 9.1 percent, according to the Bloomberg hedge fund aggregate index. Pay declined in 2008, after the average fund lost 19 percent. Glocap and Chicago-based Hedge Fund Research said they expect remuneration this year to mirror 2009 levels.
Compensation for junior-level analysts is expected to decline on average less than 10 percent, Zoia said. Fund marketer and compliance staff pay will likely range from flat to an increase of 10 percent to 15 percent as demand has outweighed supply, he said. Hedge-fund accountants' compensation should be flat to slightly up. Source
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