Breaking down hedge fund pay in New York and London. And male vs. female

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Breaking down hedge fund pay in New York and London. And male vs. female

Among the biggest misconceptions about hedge funds is that everyone takes home massive seven-figure paychecks. The fact is, less than 10% earn more than $1 million annually. That said, reaching the upper ranks at a profitable hedge fund can provide a very comfortable financial future – as long as the firm can manage to keep its doors open, something many have struggled to do in recent years.

Using data from The Pay Index, a salary database powered by financial recruiter Leathwaite, we broke down average compensation for senior hedge fund professionals – people at the director-level or higher – for both New York and London. We also looked at their average base salary, bonus and any deferred cash or stock compensation over the last 18 months. The gender data is in the second chart below. 

As you can see, senior hedge fund professionals in New York come out well ahead, taking home roughly $548k, with base salary and bonus totals closely mirroring one another. That bests the average in London by more than $100k. The $437k in total compensation across the pond also includes 16% in deferred salary, compared to just 11% in New York. But the biggest difference is with bonuses. Senior New York hedge fund professionals earn an average bonus of $241k, compared to just $164k in London. Based on any metric, you’re liable to earn quite a bit more in the U.S. financial capital than in the U.K.’s. 

Meanwhile, we also looked at how senior male hedge fund professionals fare compared to their female colleagues. As there aren’t that many women in the senior ranks at hedge funds, we compared the numbers globally to ensure a statistically significant number of responses were included. Like in other recent studies, the numbers reveal a significant pay gap. Men take home around $74k more than women, a difference of roughly 15%. Moreover, women see around 18% of their total compensation deferred, compared to 11% for men, who also earned a 32% bigger bonus. 

The 15% gap is actually a smaller figure than ones found in other recent studies, including Citi’s. The bank said in January that women at the firm earn 29% less than men. While calling it an “ugly number,” Citi CEO Michael Corbat said the bank is more than 50% female. He pointed to the “imbalance at the senior job and leadership level” as part of the explanation for the gap. Leathwaite’s numbers don't include junior positions, so the difference at hedge funds can’t be explained away based on seniority. However, the positions women hold at hedge funds may play a prominent role.

A 2018 Preqin study found that women account for 26% of senior investor relations and marketing roles at hedge funds. Meanwhile, women hold just 6% of better-paying senior investment jobs. Ironically, several different studies have found that female investors and financial advisors generate better returns than their male counterparts, mostly due to making fewer trades.

 

Have a confidential story, tip, or comment you’d like to share? Contact: btuttle@efinancialcareers.com Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by actual human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t).  

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