Hedge Fund Pay Soars As Bonuses Rise 30%

Jan 17 2014 | 2:23pm ET

Last year was a disappointing one for hedge fund managers—until bonus time, that is.

The average hedge fund ended 2013 up about 10%, according to industry indices. Compared to the broader markets—the Standard & Poor's 500 Index rose nearly 30%—that's not impressive at all. But with hedge funds taking about 20% of those profits, it still left a lot of money to go around.

Overall, average cash compensation jumped 16% last year to $330,000, according to Benchmark Compensation's annual report. Most of that, however, was due to a 30% increase in bonuses, with base compensation rising just 4% on the year.

"As we reported last year, fund performance results in significant bonuses, especially for those closely involved in the investment decisions," HedgeFundCompensationReport.com's David Kochanek said. "This wasn't always the case, but in a post-recession market, pay for performance is now the rule."

"For those in decision-making roles, this level of performance results in tremendous compensation. Thirty-one percent of hedge fund employees expected 15% to 100% more money while 5% expected to see their compensation more than double."

According to the survey, more than 90% of hedge funds enjoyed gains last year, with only 3% reporting losses. Fifty-four percent of respondents posted double-digit gains, and 18% returned 25% or more.


In Depth

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Cash: An Asset In Adolescence

Aug 31 2017 | 3:34pm ET

If the investment industry has a rebellious teenager in the house today, that teenager...

 

From the current issue of