Survey: Hedge Fund Compensation Falls 10% In 2011

Oct 26 2011 | 8:14am ET

Hedge fund compensation declined by about 10% on average in 2011 across a variety of roles, with portfolio managers and traders taking the steepest cuts, according to the most recent Glocap survey.

Between firms (and even within firms) there was “a wide dispersion of compensation,” according to the Glocap 2012 Hedge Fund Compensation Report, depending on variables like position, seniority, experience, fund size and annual performance.

The hedge fund industry managed record levels of capital in both Q1 and Q2 2011, hitting $2.04 trillion before falling off sharply on poor performance in Q3 (the fourth-worst quarter in history, one which saw the HFRI Fund Weighted Composite decline 6.2%).

Growing assets translated into higher management fee income for funds, which Glocap says partially offset the decline in incentive fee income.

Moreover, despite the disappointing Q3 performance, the percentage of funds reaching their performance high watermarks in the trailing 12 months continued to rise, exceeding 70% as of the end of 3Q, which "further stabilized the pool of income available for compensation."

Glocap’s 2012 report was published in partnership with HFR. The report analyzes base salaries and bonuses for professionals at U.S.-based hedge funds and funds of funds.

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