Report: PE Offers Stability, Hedge Funds Higher Compensation

Jan 22 2015 | 12:06pm ET

If you're a young London MBA weighing job offers from a private equity shop and a hedge fund, the choice may be between stability and higher absolute returns.

Salary benchmarking site Emolument.com analyzed data from 600 hedge fund and private equity professionals in London and found that while hedge funds are “a more volatile environment than private equity firms,” they generally reward their new recruits accordingly—with higher total compensation for analysts right out of the gate .

With the passage of time, the base salary gap between private equity and hedge fund increases, said the data provider. While bonuses “are still more interesting” for hedge fund professionals, base salaries for p.e. vice presidents, directors and managing directors are “more substantial.”

Hedge fund managing directors, however, earn an average bonus of £336,000 ($507,000), far outstripping their private equity counterparts.

Said Thomas Drewry, Emolument.com CEO, in a statement: “In the last couple of years specifically, banks have had fierce competition in retaining talent from leaving for hedge funds and private equity firms. With similar skill sets required in both environments, bankers are often confronted with a career choice as to which to pick. At least they now have a better idea of what it entails in terms of compensation throughout their career: more stable revenue profiles from private equity firms but higher absolute returns from hedge funds.’

Launched in 2012, Emolument.com is a real-time bonus and salary-benchmarking site dedicated to finance and other professional services industries. With over 38,000 contributions from individuals at over 5,500 institutions, the service has become the leading provider of validated real-time remuneration data.

Emolument.com sources salary and bonus data directly from individual professionals who contribute anonymously.


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