Hedge Fund Pay On The Rise

Nov 9 2012 | 11:08am ET

Hedge fund performance may be no great shakes this year, but that hasn't stopped hedge fund managers from giving themselves and their staffs a nice raise.

Pay at hedge funds has increased 15% this year compared to last, according to Glocap Partners' annual hedge fund compensation survey, conducted with Hedge Fund Research. By contrast, pay at private equity firms remained flat.

The raises could be the result of increasing hedge fund assets, which are up about 10% this year. They are not due to competition from outside the industry, Glocap CEO Adam Zoia said, as investment banks cut back on trading in the face of new regulations.

Zoia said that a portfolio manager at a mid-sized hedge fund with middling performance can expect to be paid about $1.3 million this year. Those at larger firms, or with top performance, could get more than twice as much.

"These are three areas where there has been a consistent increase in demand for experienced talent in the past few years," Zoia told Financial News.

Despite those robust figures, much of the pay increase can be attributed to richer packages offered to compliance, marketing and risk-management employees, another sign of the direction in which the industry is headed.

Senior traders make an average of $500,000; traders in general saw pay raises of up to 14% or cuts of as much as 1.5%. Likewise analysts, whose compensation changes ranged from 9% raises to 5% cuts.

"Intense competition limited compensation pools at entry and mid-level positions," Glocap explained.

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