Report: Expect Small Bump In Hedge Fund Bonuses

Sep 10 2007 | 1:05pm ET

Hedge fund professionals, brace yourselves. The credit market debacle is going to hit you where it really hurts: in your paycheck.

Compensation at U.S. hedge funds continues to rise, but bonuses will rise only slightly this year, according to a new report.

The annual study, from Glocap Search, Institutional Investor News and Lipper HedgeWorld, show that base salaries for all investment professionals and traders at U.S. hedge funds, on average, rose by single digits. Likewise, cash bonuses are expected to rise from 1% to 9%, “a substantially lower increase than what we were predicting before the credit crunch this summer.”

Still, we needn’t cry for the average hedgie: According to Glocap’s Adam Zoia, the flood of assets into hedge funds is driving the market for hedge fund pros, consequently driving up compensation packages.

For instance, relative newcomers (one to four years experience) at funds with between $1 billion and $3 billion in assets can expect to earn more than $330,000 in total compensation this year. Veterans, with more than 10 years experience, at the biggest funds (more than $10 billion in assets), will take home $2.35 million on average in 2007.

Also, fundraisers will average $730,000 in compensation this year, the report says, and senior fund of funds analysts, for their part, will earn on average $325,000.

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