ANN ARBOR, Mich., March 2, 2017 /PRNewswire/ -- Despite continued underperformance for investors in the hedge fund industry, the 2017 Hedge Fund Compensation Report shows that a majority of hedge fund professionals expected higher pay in the form of base compensation and bonuses. Only one in five expected to make less than the previous year.
This year, earnings at the top of the pay range remained strong. Those in the mid-tier range increased by 6 percentage points over last year, which nearly matched the percentage of professionals expecting to make lower pay.
The tenth annual Hedge Fund Compensation Report analyzes data collected directly from hedge fund professionals representing hundreds of global investment firms. "Our report polls a cross-section of industry insiders on many different factors related to hedge fund compensation," says David Kochanek, publisher of the report. "That makes it possible for us to compare complex variables and dig into a decade's worth of information to identify trends and see changes in the industry in both bull and bear markets."
For most in the industry, bonuses are an integral part of overall compensation. In fact, bonus pay represents 80 percent of total compensation for hedge fund professionals in the uppermost pay bands. Although some hedge fund professionals report they are guaranteed lump sum bonuses, eight out of 10 receive bonuses tied to performance metrics or other discretionary factors.
"We are beginning to see an increased correlation between fund performance and bonus pay after some years of disconnect," says Kochanek. "Unlike last year, funds that are up the most are now reporting the highest bonuses. We no longer see funds that are down or breaking even reporting higher bonuses than those operating in the black. It seems rational compensation numbers are returning to the industry."
Those in the industry remain largely dissatisfied with their compensation. Across a wide range of titles, roles and experience levels, 61 percent are unsatisfied with their total pay. As in previous years, those that earn the most are most satisfied, implying that those in decision-making roles feel adequately rewarded for their additional responsibility.
About the Report
The 2017 Hedge Fund Compensation Report is based on compensation data collected directly from hundreds of portfolio managers and employees from many large and well-recognized hedge fund firms, as well as small firms that make up the majority of this industry.
A sampling of firms represented in this year's report includes: Alliance Bernstein, AQR Capital Management, The Berkeley Capital Group, Bluebird Capital Management, Brevan Howard, Calixto Global Investors, Cheyne Capital Management (UK), Clearline Capital, Credit Suisse, Fifth Street Asset Management, Goldman Sachs, Haven Capital International, Hutchin Hill, ICMC, Lagoda Investment, Lionhart Canada, LRV Capital, Millennium, Och-Ziff Capital, SandPointe, Seer, Silver Point Capital, The Rock Creek Group, TPG and Wolverine Asset Management.
Now in its tenth year of publication, the report breaks down hedge fund compensation, including base pay and bonus payouts, according to a variety of factors such as fund performance, fund strategy, group size, firm size, job title, work experience, education and hours worked. The goal is to provide those interested in hedge fund compensation with a comprehensive, reliable and affordable benchmark.
For more information or to download the complete report, please visit HedgeFundCompensationReport.com.