Tuesday, 22 July 2014
Last updated 45 min ago
Nov 1 2013 | 9:57am ET
As hedge fund industry assets have risen, so have paychecks: average compensation is up between 5% and 10% to date in 2013, according to new research from Hedge Fund Research and Glocap Search.
The 2014 Glocap Hedge Fund Compensation Report found "wide categorical and performance-driven disparity" in hedge fund employee remuneration, with portfolio managers, senior analysts and risk managers at top-performing funds seeing the highest relative increases.
Hedge funds globally managed capital in excess of $2.51 trillion as of Q3 2013 and over that period the HFRI Fund Weighted Composite Index has gained 5.5%. In addition, a full 62% of hedge funds reached their high water marks as of end September, up from 48.4% a year earlier.
The survey found that bonus pools, enriched by a combination of rising performance and management fees, will be used to fund higher compensation for key hedge fund staff.
The survey noted several compensation trends in 2013. Generally, hedge fund hiring has increased this year with an emphasis on qualified entry-level positions (compared to last year's focus on legal, operational and marketing hires). One result has been to reduce the rate of compensation increases for people in the latter roles.
The survey also found hedge funds prepared to pay a premium for candidates “in historically internal-facing roles” who were “capable of being market- or client-facing.” These included hires in risk management, information technology and front -office positions as well as portfolio managers, traders and analysts.
One drag on hedge fund compensation was declining compensation in the banking sector and flat compensation in the private equity sector. Hedge funds were also under continued pressure to provide greater liquidity, more frequent reporting of results, less advanced notice for redemptions and short or no lockup periods.
“Compensation trends in 2013 reflect the powerful evolution of the hedge fund industry and individual funds toward fully transparent, client-centered financial services organizations,while maintaining a required focus on generating performance for investors,” said Kenneth J. Heinz, president of HFR, in a statement.
“Compensation policy is designed to create a greater alignment of interest between a fund’s management and investors, support greater organizational stability, and improve investment strategy execution. As a result of this continued enhancement and refinement, the hedge fund industry has grown to a record level of investor capital in 2013 and is well positioned for additional growth and expansion in coming years.”
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…